Butyl Rubber Price May Continue to Stay at Highs

Regular butyl rubber: In H1, 2019, prices of Chinese-made regular butyl rubber increased a little from the beginning of the year, and those of imported resources moved sideways. At the beginning of 2019, the price of regular butyl rubber was RMB 14,000/mt and reached a high level of RMB 16,500-16,800/mt in May. The price of Russia-origin products was about RMB 16,500-16,800/mt.

Halobutyl rubber: In H1, 2019, the market prices of halobutyl rubber first increased and then fell back. After the New Year’s Day holiday, the price of ExxonMobil’s resources went up, lifting the price of other resources. However, the price of other halobutyl rubber resources saw limited increases, so sales of ExxonMobil’s resources were not good amid the high prices. In addition, the price spread between imported goods and Chinese-made goods was large. Later, the price of imported resources started to drop. 

Affected by the anti-dumping against the imported halobutyl rubber, sales of Chinese-made resources were good, and the price saw notable increases. It was learned that some tire enterprises mainly digested the Chinese-made halobutyl rubber, so as to save the cost.

Supply: The output increased somewhat, while the import volume dropped obviously.

H1, 2019 butyl rubber output statistics 

According to SCI, the total output of butyl rubber in China was 80.6kt from January to June 2019. Therein, the output of regular butyl rubber was 23.9kt, and the output of halobutyl rubber was 56.7kt. The profit at butyl rubber enterprises was passable this year, and the sales were good. Zhejiang Cenway, Shandong Chambroad Petrochemicals and Sinopec Beijing Yanshan Company maintained normal production, but the units at Panjin Heyun and Formosa Synthetic Rubber (Ningbo) were still in long-term shutdown.

Butyl rubber import volume analysis 

Affected by the anti-dumping duties and the strict inspection from customs, the import volume of halobutyl rubber dropped greatly. Butyl rubber enterprises in China main produced halobutyl rubber. The import volume of regular butyl rubber increased a little. From January to May 2019, the import volume of regular butyl rubber totaled 29.2kt, up 8.08% Y-O-Y, while that of halobutyl rubber totaled 63.7kt, down 30.23% Y-O-Y. 

Demand: The output of tire declined, leading to a reduction in demand for butyl rubber. 

According to SCI, from January to May 2019, the output of all-steel tire totaled 50.744 million pieces, down 1.75% Y-O-Y.
According to SCI, from January to May 2019, the output of semi-steel tire totaled 192.3322 million pieces, down 8.62% Y-O-Y.

SCI Forecast: In H2, 2019, downstream tire plants may face increasing sales pressure, as it will be more difficult for sales in the OE tire market and export market to grow steadily. Besides, the weather will be hot in Q3, so the operating rate at downstream tire plants may be impacted. As a result, the demand for butyl rubber will weaken. However, the maintenance plan may provide some support to the prices as the supply is expected to tighten. It is predicted that the butyl rubber market may fluctuate at highs in H2, 2019, with the price of regular butyl rubber fluctuating in the range of RMB 14,500-16,500/mt and that of halobutyl rubber fluctuating in the range of RMB 18,500-23,000/mt.

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