Q3 2024 NBR Prices Rise After Dropping
Highlight: In Q3 of 2024, NBR market prices rose after dropping. NBR market prices first dropped due to sluggish demand and then rose driven by cost, supply, and related products.
In Q3, China’s NBR market prices rose after falling overall. As of September 29, taking 3305E produced by PetroChina Lanzhou Petrochemical as an example, the quarterly average price was RMB 15,419/mt, up 6.65% QOQ and 8.41% YOY.
In July and August, NBR market prices moved down due to the tug-of-war between sluggish demand and high costs. Entering the traditional demand off-season, the downstream consumption volume of NBR shrank. Some downstream plants saw a decline in orders and had weak profitability, so they showed insufficient demand for feedstock, thereby dragging down the NBR market prices. However, thanks to relatively high butadiene prices, the decrement in NBR prices was narrow. In September, the NBR market was mainly influenced by cost, supply, and relative products. Despite a rebound in NBR output, due to the slow delivery of some resources and short covering in the market, the actual spot supply saw no apparent growth, so the supply side still underpinned the NBR market. Besides, the high prices of butadiene and the notable increase in rubber futures also had a bullish influence on the NBR market. Therefore, NBR prices still moved up despite a limited increment in downstream consumption volume, but the lukewarm demand restricted the high-priced transactions.
In Q3, NBR market prices first dropped due to sluggish demand and then rose driven by cost, supply, and related products.
Insufficient demand dragged down NBR prices in July and August and restricted the high-priced transaction volume in September.
According to data from the National Bureau of Statistics, the PMI index in August was 49.1%, down 0.3 percentage points from July; the manufacturing production index was 49.8%, down 0.3 percentage points from July, and the new orders index was 48.9%, down 0.4 percentage points from July. Affected by traditional production off-season, high temperatures, and rainy weather, PMI remains in a contraction state, and the new orders index has been below the prosperity line for four consecutive months, reflecting no improvement in market demand. Therefore, the NBR market price in this stage mainly moved downward. The PMI index in September was 49.8%, up 0.7 percentage points from August; the manufacturing production index was 51.2%, up 1.4 percentage points from August, and the new orders index was 49.9%, up 1.0 percentage points from August. Although some enterprises’ orders improved month-on-month in September, indicating that the market demand of the manufacturing industry improved slightly, the overall situation was still worse than last year, and enterprises mainly bought feedstock on a need-to basis. Under the limited demand expansion background, the NBR high-priced transaction progress was slow.
In September, the prices of related products rose sharply, injecting positive sentiment into the NBR market. The cost and supply support further solidified the upward trend of NBR prices.
In September, natural rubber prices rose significantly, mainly benefiting from macro and industrial synergy support. Typhoons resulted in excessive rainfall in the main production areas, which hindered rubber tapping and limited feedstock output. The overall volume of new rubber increased slowly. The acquisition price of feedstock was high, and the cost support was relatively obvious. At the same time, the People’s Bank of China launched a series of heavyweight policies, and a series of monetary policies supported the overall strong performance of the commodity market, and natural rubber was affected and rose along with it. For NBR, on the one hand, the price rise of related rubber boosted the NBR market atmosphere. On the other hand, the price increment of NBR over SBR and PBR was gradually compressed.
In September, the high price of feedstock butadiene and the supply shortage of certain grades further reinforced the uptrend of NBR prices. Firstly, from the perspective of butadiene, the market spot supply was tight because Shandong Shouguang Luqing Petrochemical’s butadiene was all used internally, the available supply in Northeast China decreased, and most of the imported goods arrived at the port in the latter half of the month. The tight spot supply in the market gave strong support to butadiene prices. Additionally, due to the Mid-Autumn Festival and National Day holidays, downstream manufacturers had low inventories, and some purchased based on their rigid needs, which also provided support for butadiene prices. As of September 29, the butadiene delivered price in Jiangsu and Zhejiang was RMB 13,350-13,450/mt, up 4.08% from the beginning of the month. The high price of butadiene also intensified the production cost pressure for NRB producers, giving cost support to NBR market prices.
Secondly, from the perspective of NBR supply, although domestic NBR units ran stably in September, some grades of available spot inventory were at low levels. On the one hand, the shipment of some NBR grades was slow, and the market continued to deplete inventory. On the other hand, there was some pre-sale negotiation in the latter half of August, while the new goods were shipped slowly, some dealers also needed to deliver a certain number of orders from the previous period. The two factors combined resulted in a supply shortage of certain NBR grades, and dealers had little willingness to sell at low prices.
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