Aug China SBS Operating Rate Edged Up
The recovery of gross profit was the key factor for the slight increase in operating rate.
In August, the operating rate of China’s SBS industry was 50.81%, up 3.1% M-O-M. The operating rates of some SBS units declined. However, PetroChina Dushanzi Petrochemical resumed production, and some production lines at Ningbo Changhong Polymer Scientific and Technical were restarted in mid-August. Therefore, the overall operating rate inched up, though Shandong Huayu Rubber Company and Zhejiang Zhongli Synthetic Material Technology shut their units down briefly.
In August, butadiene prices first went down and then rose. Sinopec East China Marketing Company’s butadiene price was closed at RMB 8,300/mt. The styrene price slowly rose after going down and was closed at RMB 8,850/mt. The production cost fluctuated downwards in August. The monthly average cost dropped by 13.6% M-O-M. The decrease in costs and recovery of profit facilitated some SBS prices to raise their operating rates, so the overall operating rate inched up.
Influence of anticipated SBS production change in September on the market
The operating rate of China’s SBS industry is predicted to ramp up in September. Oil-extended SBS: Fujian Gulei Petrochemical will continue reducing production and plans to shut its unit down in September. The production resumption date at Sinopec Maoming Petrochemical is to be determined. Major producers will probably have low planned output, and some producers do not plan to arrange the production. Therefore, the overall supply of oil-extended SBS is predicted to be largely unchanged in September. Dry SBS and road bitumen modification-used SBS: Most producers will be under normal production, and Ningbo Jinhai Chenguang Chemical and Guangdong Sunion Chemical & Plastic plan to restart their SBS units. The supply is expected to ramp up in September. Some private SBS producers plan to restart their units. Some producers are still under sales pressure. However, the overall social inventory is relatively controllable, and especially, most SBS producers are not under high inventory pressure.
SCI predicts that China’s SBS supply will level up in September. Demand is expected to increase, and especially, the modified bitumen market will usher in the peak consumption season in September. Players should pay attention to changes in supply and demand.
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