Q1 SBR Price Fell After Rising, but Q2 to Rebound
Snapshot: In Q1, the operating rate at downstream tire industry resumed to a high level rapidly after the Spring Festival holiday, but the SBR market price hardly moved up. It was because the natural rubber price curbed the SBR price, affecting buyers’ sentiment and the market atmosphere. It is projected that the SBR price is likely to rebound slightly.
Q1 the operating rate of tire industry rose rapidly, and it stayed high in April.
In Q1, the major downstream tire industry saw a rapid recovery in the operating rate. From mid and late February, the operating rate of semi-steel tire industry surged to 74.15%. The average operating rate in March reached 73.77%. In April, it remained high. First, the sales of exports at tire enterprises were fairish, strongly bolstering the overall sales volume. Second, the plant inventory stayed low, so tire enterprises actively conducted production to replenish the inventory. The overall output kept rising. However, the rising operating rate of tire industry failed to drive up the SBR price.
The SBR price was more resilient to falling, but faced pressure in rising.
In 2023, the SBR price fluctuated upwards from a low level to RMB 11,950/mt, and then it fell. The price of ESBR 1502 in North China hit a high of 2023 at RMB 11,950/mt in end February. After March, the decrement in the SBR price was minor, but the SBR price faced pressure in rising, which was curbed by the low price of natural rubber.
The natural rubber price trended at lows, and the SBR spot was transacted on rigid demand.
From 2023, the natural rubber price stayed low under the pressure of fundamentals and macro environment. Natural rubber and SBR are substitutes to each other in application. According to the price spread between them and their physical properties, the using proportions of them are decided. Therefore, the price of natural rubber was lower than that of SBR price in 2023, weighing on the SBR price.
According to the price change patterns of SBR and natural rubber from 2013-2023 traced by SCI, we analyzed the influence from the price spread between them on the SBR price. In 2013-2015, the SBR price was regularly lower than the natural rubber price. From 2016, the situation changed and the SBR price became higher than the natural rubber price. Considering the production cost, most downstream industries constantly changed the using proportions of them according to the price spread between SBR and natural rubber. In 2017, downstream industries adjusted the using proportions of SBR and natural rubber based on the price spread of RMB 300-500/mt regularly, which was the major reason why SCI analyzed the influence of the price spread from 2017 on the SBR price.
The correlation between SBR price and the price spread was analyzed as follows based on the data of SBR prices and natural rubber prices from 2017.
Period 1: From January to March 2017, the SBR price was constantly higher from the natural rubber price with the largest price spread of RMB 6,000/mt. In late March 2017, the price spread fell. From early May 2017, the SBR price changed to be lower than the natural rubber price with the largest price spread of RMB 1,850/mt. From August 2017, the SBR price increased notably.
Period 2: From October 2017, the SBR price was much higher than the natural rubber price. From March 2019, the SBR price became lower than the natural rubber price. In end-April 2019, the SBR price was much lower than the natural rubber price with the largest price spread of RMB 1,550/mt. From July 2019, the SBR price ushered in an uptrend.
Period 3: In mid-October 2019, the SBR price began to be lower than the natural rubber price. From May 2020, the SBR price was much lower than the natural rubber price with the largest price spread of RMB 2,600/mt. From mid-September 2020, the SBR price saw an uptrend and the growth rate moved up in October. According to the price trend patterns above, SCI reckons that two or three months after that the SBR price changes to be lower from that natural rubber price, the SBR price will possibly rebound.
In 2023, the natural rubber price was constantly lower than the SBR price with the largest price spread of RMB 800/mt, dragging down the buyers’ sentiment and the market atmosphere and weighing on the increase in the SBR market price.
In a short term, the decrement in the SBR price may be minor.
As seen from the rise and fall possibility of the SBR price in past 13 years, the SBR price is more likely to trend down in Q2. In Q2, the demand may trend flat. Yet, some SBR units are expected to take maintenance, underpinning the SBR price. The natural rubber price is predicted to trend at lows, weighing on the SBR price.
As for the SBR price trend in Q2, SCI predicts that the decrement in the SBR price may be minor, while the increment in it will possibly be also limited.
On the one hand, the low natural rubber price may still curb the SBR price. Downstream users are likely to purchase on rigid demand. The spot dealing atmosphere in the market is predicted to hardly improve.
On the other hand, the influence of demand is expected to be neutral on the SBR price. As the previous orders may be delivered constantly, the inventory at tire enterprises will tend to be normally in end-April. The operating rate may hardly remain high in May and June. The consumption of tire in the end market slows down currently, and it may take some time to rebound. It is projected that the tire orders may decrease in Q2. In April, the tire industry will tend to replenish the inventory. In May and June, there may be fewer order in tire industry, obviously affecting the players sentiment in the SBR market.
Players should notice that the 100kt/a SBR unit at Nanjing Yangzi Petrochemical and Rubber may take overhauls for around 40 days from May. In end-May, the 170kt/a SBR unit at Shen Hua Chemical Industrial is scheduled to take maintenance for about 10 days. In June, the SBR unit at PetroChina Lanzhou Petrochemical is expected to take maintenance for around 45 days. In Q2, the output loss caused by maintenance is estimated at 28.5kt, leading to a rebound in the SBR market price. Yet, considering the stable demand and low natural rubber price, the increment in SBR price is predicted to be limited in Q2. Players should pay attention to the downstream replenishment.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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