Will IIR Demand Achieve Growth in Sep?
The IIR production at Sinopec Yanshan Petrochemical Company was restored at the beginning of August, and the unit under maintenance at Zhejiang Cenway New Materials resumed production in H2 of August. The 70kt/a unit at Shandong Chambroad Sinopoly New Material was expected to be overhauled until the middle of September. With the resumption of operation of IIR producers, the average operating rate of China’s domestic IIR industry is expected to increase in September. Will the demand improvement come as expected?
The 70kt/a unit at Shandong Chambroad Sinopoly New Material was shut down for maintenance, and it was expected to be restarted around the middle of September. Zhejiang Cenway New Materials resumed IIR production around the middle of August, and Sinopec Yanshan Petrochemical Company resumed production in early August. The 50kt/a unit at Shandong Chambroad Sinopoly New Material produced regular IIR in H1 of August and changed to produce BIIR in H2. Panjin Cenway New Materials was in the production of regular IIR and HIIR. Formosa Synthetic Rubber (Ningbo) has been out of production for a long time.
China IIR Operating Rate
In Q3 2022, the lowest point of the overall operating rate of the IIR industry appeared at the end of July. In July, the average operating rate of China’s IIR industry was about 61.60%, down 17% from June, which was mainly attributed to unit maintenance. AS China’s IIR units resumed production gradually in August, the overall operating rate showed an upward trend. In August, the average operating rate of China’s IIR industry was about 65.07%, up 3.47% from July. By Sep 8, the average operating rate of China’s IIR industry was about 61.43%, up 4.61% from last week. SCI predicts that the average operating rate of China’s IIR industry may increase in September.
Recovery of End Demand
The influence of hot weather gradually subsides in Q3, and the tire demand is expected to have an appreciable improvement in the traditional peak season in September. Besides, the sales in Q3 are expected to boost by various promotional policies such as trade conferences and roadshows. At the same time, supported by policies, the successive launch of infrastructure construction projects will benefit the sales of all-steel tires. In terms of the OE tire market, under the support of many favorable factors such as infrastructure construction, the commercial vehicle market is expected to further recover, and all-steel OE tire sales may achieve new increments.
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