Sep PBR Price to Face Higher Pressure on Rising with Fundamentals Weakening
Introduction: In September, the PBR market price rebounded notably after edging down mainly driven by the rise in the prices of related products and the feedstock butadiene. In the short term, the cost is expected to bolster the bottom of the PBR price as the fundamentals may weaken.
The PBR price rose notably.
In the first half of September, the PBR price mainly trended up. According to SCI, as of September 14, the average price of HCBR 9000 in North China was RMB 15,241/mt, up 4.94% from the monthly average price in August.
At the beginning of September, the price of PBR futures slid for a short period. Accordingly, the price of spot PBR also went downwards. After that, affected by Super Typhoon Yagi, the supply of natural rubber was expected to be tight, offsetting the bearish influence of the stock release. Thus, the price of natural rubber futures moved up significantly. The price of PBR futures moved up passively. Besides, the situation of tight butadiene resources continued, and the market trading was active, triggering a notable rise in the butadiene price. Thus, the PBR industry underwent high profit losses. Traders were reluctant to sell PBR resources at lows and stiffened their offers. The inventory hovered at a low level, and the price of spot PBR trended up. However, with the operating rate recovering, buyers showed resistance to high prices and held strong wait-and-see sentiments. The market dealings were mainly conducted on rigid demand in small batches, and the increment was minor.
In the short term, the fundamentals may weaken, curbing the increment in the PBR price.
The operating rate of the PBR industry is expected to trend up.
The PBR units at Shandong Wintter Chemical and Zhenhua New Materials are expected to take maintenance in the short term. The units at PetroChina Jinzhou Petrochemical and Nanjing Yangzi Petrochemical and Rubber may resume normal production in succession. The other units are likely to run normally. Overall, the operating rate of the PBR industry is expected to move up in the short term. Yet, the average operating rate in 2024 may be still lower than that in 2023. Although the newly added capacity went into production in H2, 2024, the limited capacity release may still bolster the rise in the PBR price.
The operating rate of the tire industry may recover slightly but be lower YoY in September.
In September, the operating rate of the all-steel tire industry is expected to edge up, but the increment is likely to be minor. Specifically, the tepid demand may drag down the sales at tire enterprises. At the same time, due to the high feedstock cost pressure, some tire enterprises will possibly control production. Besides, the inventory at all-steel tire enterprises is still high, curbing the operating rate to some extent. In September, the supply of all-steel tires is expected to ramp up, while the demand in September and October may be not optimistic and some tire enterprises plan to control production. Therefore, the support from fundamentals is likely to weaken.
The support from the prices of related products is predicted to be strong, underpinning the bottom of the PBR price.
As for cost, the supply-demand gap of China’s butadiene in September is likely to enlarge MoM. In the short term, China’s butadiene market price is expected to remain high. The spot supply in northern markets may hardly increase, so producers are likely to face passable pressure on sales. The port arrival may be also limited, failing to supplement China’s spot supply effectively. Thus, the supply will possibly bolster the butadiene price. As for demand, with the butadiene price rising to a high level, some downstream industries may bear cost pressure again, weighing on the operating rates of downstream units. Thus, some downstream units are likely to run at lower loads. Yet, the rigid demand may continue to bolster the butadiene price, so the decrement is likely to be minor. As of September 12, the gross profits of China’s PBR industry were RMB -900/mt, underpinning the bottom of the PBR price.
The natural rubber market price is likely to fluctuate upwards in the short term, strongly bolstered by supply. On the one hand, the overall growth of new field latex may be slow affected by rainfall. The high cost is expected to drive up the natural rubber price. On the other hand, the port arrival is scant, so the pileup time of China’s spot natural rubber inventory may be postponed. Regarding demand, the mediocre end market is expected to hamper the cost transfer from tire enterprises to downstream users. At the same time, the stock release may also weigh on the upper end of the natural rubber price. Therefore, the natural rubber price is predicted to mainly fluctuate upwards in the short term.
Overall, the increment in the PBR price is expected to be limited in the short term. Players are advised to pay attention to the changes in the natural rubber market.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
