SBR Price Climbs in Q3, and to Rebound After Falling in Q4
Keywords: SBR, Price co-movement, Supply-demand fundamentals, Price forecast
Snapshot: In Q3, China’s SBR market price rose notably. The main reason for the rise was that the PBR price perked up notably. In Q4, the SBR price is likely to rise after falling, but the increment may be minor. It is projected that the high-end price in Q4 is expected to be lower than that in Q3.
Driven by the large increase in the PBR price, the SBR price hit an annual high in Q3.
In Q3, China’s SBR market price climbed, hitting an annual high. Up to September 28, the price of ESBR 1502 in North China closed at around RMB 12,950/mt, which was RMB 1,600/mt or 14.1% higher than the lowest price in Q3. Besides, it also rose by RMB 2,350/mt or 22.17% compared with the lowest price in 2023. The main reason for the rise in the SBR price in Q3 was as follows. The price of the PBR futures constantly increased due to the low expected volume of delivered PBR. Thus, the market price of spot PBR rose rapidly. As seen from the fundamentals, dealings were obviously curbed after the SBR price continuously increased.
In 2023, the market price of SBR was higher than that of PBR most of the time. The largest price spread reached RMB 1,350/mt. In H1, 2023, SBR units took maintenance intensively. Bolstered by supply, the SBR price was relatively resilient. Since the synthetic rubber futures were listed on July 28, the price of PBR futures has been rising with few delivered PBR resources, and the spot price has been also rising accordingly. In Q3, the highest closing price of HCBR 9000 in North China reached RMB 13,650/mt, up RMB 3,100/mt or nearly 30% from July 28. It also drove up the SBR price. In Q3, the highest closing price of ESBR 1502 in North China reached RMB 13,650/mt, up RMB 2,100/mt or 18.18% from July 28. The increment in the SBR price was smaller than that in the PBR price. The main reason was as follows. In Q3, most SBR units ran normally, leading to a stable supply. Compared with PBR, SBR is easier to be substituted by natural rubber in downstream applications.
The price of natural rubber was much lower than that of SBR. The SBR market price reversed the rally under pressure.
Since 2023, the natural rubber price has remained at lows pressured by its fundamentals and the macro environment. Natural rubber and SBR can substitute each other in applications. According to the price spread between them and their physical indicators, the substitution ratio is adjusted. Therefore, the substitute demand weighed on the SBR price as the natural rubber price remained lower than the SBR price.
In 2023, the SBR price has been higher than the natural rubber price, affecting buyers’ sentiments of the downstream tire industry somewhat. In Q3, the largest price spread between them reached RMB 2,225/mt, hitting an annual high. The main reason for the rise in the price spread was as follows. The SBR market price registered an uptrend, while the natural rubber price faced headwinds in rising affected by its fundamentals. From the perspective of substitute demand, when the SBR price is over RMB 2,000/mt higher than the natural rubber price, downstream tire users use more natural rubber to substitute SBR. Considering the fund value, downstream users showed higher interest in purchasing natural rubber than SBR. Thus, the spot dealings of SBR were curbed, further weighing on the rise in the SBR market price.
In Q4, SCI reckons that the fluctuation range of the PBR price may still affect the price trend of SBR. Yet, the SBR market price is likely to rebound after falling in Q4 from the perspective of fundamentals, but the increment may be minor.
Supply: China’s SBR units may run normally as scheduled, so the SBR supply is expected to be maximized. The sales pressure may gradually show up. It is projected that China’s SBR output in Q4 will possibly increase by 18.55% Q-O-Q, which may be ample. Demand: The demand is likely to remain weak in the short term. Yet, the feedstock SBR inventory of the downstream tire industry may be low, which can be used for around 15 days. With the SBR price falling, the rigid demand for SBR is expected to be released in succession. In addition, the introduction of China’s new policies may shore up the market confidence, driving up dealings of spot SBR. Thus, the SBR price is likely to inch up.
However, with the price rising, buyers may not show high interest in purchasing. Besides, the supply pressure and falling demand are expected to curb the increment in the SBR price in Q4, which may not reach the increment in Q3. In addition, according to the rise and fall possibility in the recent 13 years and the price seasonality, SCI reckons that the SBR market price is expected to rebound after falling, but the increment may be limited in Q4. The market price of ESBR 1502 in North China may linger at RMB 12,500-13,200/mt, fluctuating around the average price of the recent 13 years.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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