HCBR Price Continued to Trend Down
China’s HCBR prices extended the downward trend in November. By November 30, the price of HCBR 9000 in North China closed at RMB 10,400/mt, down 6.31% compared with that in end October.
China’s HCBR market prices went down in November. Butadiene market prices fluctuated downwards. The prices of Shanghai natural rubber futures rallied, but this bolstered the market a little. HCBR supply was insufficient, due to the intensive maintenance. However, the commission of the newly added PBR units weighed on market sentiment. Besides, demand improved from October, but the overall operating rate at all-steel tire enterprises was lower than that in the same period of last year. Inquiries and transactions were tepid, and resource holders were still under sales pressure.
Supply
The average operating rate of China’s HCBR industry in November is estimated at 71.35%, up 1.41% M-O-M and up 4.24% Y-O-Y. The output of HCBR read 92.6kt in November, down 1.28% from October and up 10.63% compared with the same period of last year. As for the state-owned enterprises, the unit at Nanjing Yangzi Petrochemical remained shut. PetroChina Jinzhou Petrochemical took maintenance from October 10, and its unit has not been restarted. As for private HCBR enterprises, Zhenhua New Materials (Dongying) took maintenance. Hipro New Material Technology’s two production lines were shut down for maintenance. Xinjiang Land Fine Petrochemical shut its unit down briefly and then restarted two production lines. The unit at Shandong Shengyu Chemical was under normal production. Except for the units under long-time shutdown, the units shut down for maintenance this month involved 290kt/a capacity, with a total output loss of 21,600mt. (Zhejiang Transfar Synthetic Materials successfully put its 50kt/a newly added PBR capacity into operation in November, but the operating rate calculation has not yet included it.)
In December, the unit at Nanjing Yangzi Petrochemical will remain shut. Hipro New Material Technology and Zhenhua New Materials (Dongying) are about to restart their units. SCI reckons that the average operating rate of China’s HCBR industry will be 75% or so in December, up 4% M-O-M. A newly added unit in Shandong Province has produced high-quality products, but soft demand is likely to put a dampener on its operating rate. The PBR capacity basis increases. Yet, closed units are successively restarted, and the capacity release is intensive. Therefore, the operating rate is predicted to continue to rise theoretically.
Demand
According to SCI, the average operating rate at all-steel tire enterprises was estimated at 53.75% in November, up 4.99% M-O-M. First, production stability and continuity improved. Most tire enterprises resumed normal production. Yet, several tire enterprises witnessed unstable production, weighing on the increment in overall operating rate. Second, the inventory was low in some regions early this month, so production for stockpiles was relatively intensive in H1 November. Third, export orders motivated tire production.
In December, the overall operating rate at all-steel tire enterprises is predicted to be stable-to-edging up. First, the production time will increase M-O-M, facilitating tire production to some extent. Second, tire enterprises are supposed to arrange production intensively in December before the Chinese New Year holiday. The production stability will be maintained for stockpiles. Third, China’s trading environment has not improved, so sales are predicted to hardly increase. Tire enterprises stock up, but the market procurement is weak. Therefore, most tire enterprises are likely to stabilize production.
Forecast: In December, China’s HCBR market prices are predicted to go lower from November, and the prices are estimated at RMB 10,000-10,700/mt.
Demand will probably still be the main factor restricting the HCBR price increase in December. Players hold a bearish sentiment towards the butadiene market. The support from the related market is predicted to be average. In terms of supply and demand fundamentals, units under maintenance are projected to be restarted in December, and the newly added PBR unit is expected to go into use. Demand will probably recover somewhat, but the growth rate of demand is likely to be significantly lower than that of supply.
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