SBR Price to Trend Up After Hitting New high in Sep
Introduction: In September, China’s SBR market price went upwards mainly driven by the rises in the prices of synthetic rubber futures and feedstock butadiene. It is projected that the SBR price may edge up in the remaining days of September. In October, the SBR price will likely trend at highs lingering at RMB 15,500-16,500/mt, mainly driven by the rise in cost and supply-demand fundamentals.
In September, China’s SBR market price moved up. As of September 18, the market price of ESBR 1502 in North China closed at RMB 16,050/mt, hitting a new high since 2018. The lowest price appeared at RMB 15,450/mt on September 2, which was RMB 3,550/mt higher than the lowest point in 2024. From the perspective of the SBR price fluctuation characteristics since 2018, the SBR price in September 2024 was higher than the maximum in the past 7 years.
The main reasons for the rise in the SBR price in September were as follows. First, the prices of natural rubber and synthetic rubber futures both trended up, boosting the SBR market atmosphere. Thus, the price of spot SBR climbed. Second, the price of feedstock butadiene saw an increment larger than expected, driving up the SBR price.
Bolstered by the rebound in the feedstock butadiene price, the SBR price trended up.
The market price of feedstock butadiene moved up, driving up the SBR price. In September, China’s market price of butadiene rose continuously after dipping. As of September 14, the delivered price of butadiene in the Shandong market was around RMB 13,800/mt, up around 4.5% from September 2. First, as force majeure factors affected the natural rubber supply, the price of natural rubber futures rebounded, and the price of synthetic rubber futures moved up accordingly, boosting the butadiene market atmosphere. Thus, the spot butadiene price halted its fall and recovered. Second, there were limited spot butadiene resources available in China, strongly underpinning the butadiene price. The volume of spot butadiene resources for outside sales in northern regions decreased by 43% MoM. The restart of the butadiene unit at North Huajin Chemical Industries was postponed. There was no butadiene resource available for outside sales at Shandong Shouguang Luqing Petrochemical. The operating rate of the butadiene unit at Jiangsu Sailboat Petrochemical dropped slightly. As Fujian Gulei Petrochemical canceled the maintenance plan of the SBS unit, the planned volume of butadiene resources for outside sales was also lower than expected. Third, downstream users purchased butadiene on rigid demand. The butadiene inventory at most downstream users was not high, resulting in some rigid demand. Besides, the demand in the PBR and SBS industries rose somewhat, underpinning the butadiene price. In September, the butadiene price perked up boosted by the uptrend in the prices of related products and favorable supply-demand fundamentals, strongly bolstering the rise in the SBR price.
The SBR price rebounded to a new high driven by the rise in the price of synthetic rubber futures.
The SBR price hit a new high mainly driven by the rise in the price of synthetic rubber futures. The price of synthetic rubber futures dominant contract rose to over RMB 15,385/mt, boosting SBR traders’ sentiments. Thus, traders raised their offers for SBR. Downstream tire enterprises showed resistance to spot SBR prices, and those in urgent need of feedstock purchased SBR on a need-to basis. Spot sales proceeded slowly, curbing the growth rate of the SBR price. The price of natural rubber futures moved up, which was an important factor driving up the price of synthetic rubber futures. The reasons for the rise in the price of natural rubber futures were as follows. First, the heavy rainfall in the main production area hampered the rubber tapping work. Besides, some processing plants underwent power outages and shutdowns. Players worried about the supply, strongly bolstering the overall price of natural rubber. In September, the price of natural rubber dominant contract once rose to RMB 17,045/mt, boosting the price atmosphere of synthetic rubber futures, thereby driving up the SBR price.
The SBR price is expected to edge up in the short term.
SCI reckons that the SBR price may edge up in September and trend at highs in October.
Cost: It is projected that China’s butadiene market price may hover at highs in the short term. The demand may rise by 5.3% to 390kt or so. The profits of major downstream industries have improved somewhat. Therein, the SBS industry and the SBR industry gain thin profits. The ABS industry and the PBR industry continue to face losses, but they shrank notably compared with previous months. Besides, the demand from the synthetic latex industry rises steadily, registering an uptrend in the consumption of butadiene. The imported butadiene resources are expected to arrive at ports intensively in late September. Yet, the resource flow has been locked, leaving limited spot resources available for circulation. Thus, the increment in China’s spot butadiene resources is expected to be minor, and the butadiene resources for outside sales in the northern market may be hardly supplemented. The strong supply and demand are likely to bolster the butadiene price, so the cost may drive up the SBR price in the short term.
Supply: The SBR output is expected to drop by 0.6% MoM in September. In October, the SBR unit at PetroChina Lanzhou Petrochemical may take turnarounds. Shen Hua Chemical Industrial is expected to cut production and run two production lines in mid-October. Thus, the SBR supply is likely to decline in the short term.
Demand: There may be some rigid demand from downstream tire enterprises due to the “golden September and silver October” peak season. The operating rate of the semi-steel tire industry is expected to edge up mainly due to the resilient export orders of semi-steel tires. Besides, the sales in the domestic market may recover somewhat, underpinning tire production. Thus, the operating rate of the all-steel tire industry is likely to be range-bound. SCI reckons that the downstream consumption volume of SBR is likely to recover slightly under the background of the “golden September and silver October” peak season. However, based on the high price of spot SBR and the situation of dealing negotiation, spot SBR trading is expected to be conducted on rigid demand in the short term.
Overall, the supply-demand fundamentals are predicted to bolster the SBR price, but the support may be weaker than that from cost.
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