Apr SBS Market to Embrace New Changes
Snapshot: Recently, more China’s SBS units took maintenance, and the inventory was reduced notably in the market. With the production profit declining, the supply in the market may stay at a low level. As some major suppliers lowered their prices, some enterprises nearly faced losses, and the downstream inventory was relatively low. In April, the SBS market may embrace new changes.
From early March, China’s SBS market prices trended down. The butadiene price failed to bolster the SBS market, and the operating rate of major downstream industries recovered slowly. Thus, after rapidly rising in February, SBS prices fell back. As the inventory of some major grades piles up, suppliers faced notable sales pressure. Therefore, some private enterprises and joint-ventures constantly introduced new sales policies to stimulate the buying atmosphere in the market. However, the market situation of multiple bearish factors began to change in late March. The SBS market is likely to reach a turning point in April.
From mid-March, the production profit at some enterprises crashed, leading to a decrease in the market supply. In mid-March, Shandong Shengyu Chemical ran one production line. Ningbo Jinhai Chenguang Chemical shut down one SBS production line. The SBS unit at Ningbo Changhong Polymer Scientific and Technical produced SIS. Huizhou LCY Elastomers shut down its oil-extended SBS production line for maintenance in late March. Thus, the SBS market ushered in inventory consumption. In end-March, some enterprises cut production and carried out wholesale price policy, leading to notable decrease in the plant inventory. The inventory at suppliers constantly transferred to the downstream players.
In March, the trading circulation volume of some grades of dry SBS and road bitumen modification-used SBS increased somewhat. Amid thick bearish atmosphere in the market, the SBS market price trended down and was often lower than EXW prices, leading to losses for some players. However, as seen from the overall downstream industries in March, the trading circulation volume in the market was obviously higher from February. The downstream bulk procurement decreased, but the downstream players replenished on rigid demand more frequently. The major social inventory saw no uptrend.
There may be some units to take maintenance in Q2, 2023, boosting players’ sentiment. Sinopec Baling Company is scheduled to shut its unit for maintenance in mid-May, which may last for 45 days. With expected long duration for maintenance, some agents are likely to reduce the sales volume from April. They are likely to largely reduce the planned sales in the next two months. Although some resources from Sinopec Baling Company are expected to flow into the market, they may not completely take the place of the current resources as new products will need some time for marketing.
The overall downstream inventory was low. The end users are expected to stock up. In March, the SBS price trended down. Meanwhile, downstream players began to purchase on rigid demand. In end-2022 and Q1, 2023, there were fewer bids and purchases in large orders Y-O-Y in the major downstream modified bitumen and waterproof roll industries.
Approaching the intensive maintenance season in May, the decrement in the butadiene price may be minor. In mid and late April, the butadiene price is still expected to rise. From mid and late April, some major units in Asia may take maintenance. Especially in May, major units in China, Japan and South Korea will take overhauls intensively. Some players filled the supply gap in May with the ocean cargo resources from Europe and America. But the intensive maintenance is still predicted to cause great losses of output. Players are advised to focus on the operating rate change of major downstream industries. The butadiene price is still expected to move up.
SCI reckons that the SBS market may be affected by multiple factors including supply, demand and cost. In March, bearish factors from demand were constantly consumed in the market. As the prices at some enterprises inched down, the prices at private and some Taiwan-funded enterprises got close to the cost line. Some downstream industries are expected to stock up with low inventory. It is projected that SBS market prices may bottom out after falling in early April. However, players are expected to hold bearish sentiment in the demand. The increment in SBS prices will possibly depend on the price trend of major feedstock butadiene in the coming days.
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