Jul SBS Operating Rate Rebounds Limitedly with Intensive Unit Maintenance
Snapshot: In July, the operating rate of China’s SBS industry was 34.95%, up 0.53 percentage points M-O-M. Despite the recovery in profits, many SBS units took maintenance as scheduled. The recovery in the overall operating rate of the SBS industry underperformed.
In July, the operating rate of China’s SBS industry was 34.95%, up 0.53 percentage points M-O-M. The profits of the SBS industry recovered somewhat. Thus, major producers including Sinopec Hunan Petrochemical ran their units at higher loads in succession. Besides, the SBS unit at PetroChina Dushanzi Petrochemical completed the annual overhaul and was restarted on July 18. However, some major SBS units still took turnarounds or ran at lower loads. The SBS units Liaoning North Dynasol Synthetic Rubber and Ningbo Changhong Polymer Scientific and Technical took maintenance. Therefore, the overall operating rate of the SBS industry increased limitedly.
In July, the profits at SBS producers recovered.
In July, the overall profits of the SBS industry recovered. The profits at most producers turned positive. The feedstock butadiene price mainly trended down in July. The butadiene price at Sinopec East China Company dropped by RMB 1,000/mt in total, and the styrene price fluctuated downwards, resulting in a fall in the cost of SBS production. However, the average ex-works prices of SBS picked up notably. According to SCI, the average profits of the major grade SBS production were RMB 186/mt, up 172.09% M-O-M.
With the profits improving, some major producers showed interest in running their units at higher loads. In late July, Sinopec Hunan Petrochemical ran its unit at a higher load and operated five to six production lines. Yet, many SBS units took maintenance as scheduled. Therein, the SBS unit at Liaoning North Dynasol Synthetic Rubber was shut down on July 6 and may be restarted in late August. The unit at Ningbo Changhong Polymer Scientific and Technical was shut down on July 10. The unit at PetroChina Dushanzi Petrochemical took turnarounds from July 1 to July 18.
In August, the feedstock butadiene price is expected to fall, leading to a fall in the cost of SBS production. As the profits at SBS producers are expected to further recover, some private producers are likely to restart their units. According to SCI, the major private SBS units at Ningbo Changhong Polymer Scientific and Technical and Heze Kexin Chemical are scheduled to be restarted. At the same time, Sinopec Hunan Petrochemical, Fujian Gulei Petrochemical, Hainan Baling Chemical New Materials, and PetroChina Dushanzi Petrochemical are expected to increase production. It is projected that the SBS output may rise notably in August, putting pressure on the sales at suppliers, thereby weighing on the SBS prices.
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