Aug PBR Market Price Rebounds After Falling
Snapshot: In August, China’s PBR price rebounded after dropping, with the average price lower than that in July. As of August 20, the PBR price fluctuated within the range between RMB 14,100/mt and RMB 14,700/mt. In late August, the PBR price is expected to edge up, but the increment may be limited.
The PBR price recovered after falling in August.
According to SCI, up to August 20, the market price of HCBR 9000 in North China averaged RMB 14,314.29/mt, down around RMB 700/mt or 4.65% from the average price in July, but up 28.1% Y-O-Y.
In August, the PBR market price edged up after falling. In early August, the feedstock butadiene market price mainly fluctuated narrowly. Yet, the drop in the EXW price of butadiene also weighed on PBR players’ sentiments. The price of synthetic rubber futures declined by over RMB 400/mt. Spot buyers mainly stayed on the sidelines and were cautious about negotiations. Traders actively cut prices to promote sales. Thus, the negotiated prices of spot PBR move down. Since mid-August, the EXW price of butadiene has been stable. The butadiene market price mainly fluctuated upwards affected by the tight butadiene resources for merchant sales. The price of synthetic rubber futures went upwards driven by the related product, boosting the market trading. Thus, the price of spot PBR halted its fall and trended sideways, and the average price edged up.
With the cost rising, the bearish sentiments in the PBR market were alleviated.
Since mid-August, the volume of spot butadiene for merchant sales decreased notably. The downstream PBR unit of Shandong Luqing Petrochemical ran at a higher load, so the butadiene volume for outside sales declined. Besides, the sales volume of butadiene in Northeast China also declined. Thus, there were limited spot butadiene available in the market, bolstering the butadiene market. With limited low-priced butadiene resources in the market, traders showed thin interest in selling goods at low prices, and some of them slightly raised their offers. In terms of the PBR industry, the average profits were around RMB -1,000/mt, dragging down producers’ production willingness. The operating rate of the PBR industry remained lower than 60% for a long term. Therefore, the PBR price was relatively resilient when the butadiene market price dropped, and the cost transfer was smoother when the butadiene price moved up.
Besides the support from cost, there were also some favorable factors in fundamentals. As for supply, the PBR unit at Hipro New Material Technology took turnarounds for a short term and was restarted on August 15. The unit at PetroChina Dushanzi Petrochemical was restarted on August 15. Yet, the unit at Sinopec Maoming Company was shut down on August 15 and is gradually restarted at present. Besides, some private units were expected to be shut down. Overall, the operating rate of the PBR industry was around 50%-60%, underpinning the PBR industry. In terms of demand, the operating rate of the all-steel tire industry in Shandong recovered from early August. With the influence of hot weather ebbing, some tire enterprises that suspended production in the early stage gradually resumed production, triggering a recovery in the overall operating rate. Yet, a few tire enterprises halted production, weighing on the overall operating rate to some extent. The tire market remained weak. The sales at tire enterprises were slow, resulting in a continuous rise in the inventory, thereby curbing tire production. Thus, the demand bolstered the PBR market limitedly. On the whole, PBR units took maintenance intensively, and the operating rate of the all-steel tire industry recovered slightly, so the fundamentals underpinned the PBR price.
The supply and demand are expected to change limitedly. The PBR price may edge up driven by cost.
Fundamentals: In the short term, the units at Shandong Wintter Chemical, Nanjing Yangzi Petrochemical and Rubber and Zibo Qixiang Tengda Chemical may remain offline. The unit at Zhenhua New Materials is about to take turnarounds. The unit at Zibo Qixiang Tengda Chemical is expected to be restarted at the end of August. The other units are likely to run normally. In late August, the PBR supply is predicted to ramp up from mid-August. As for demand, the operating rate at all-steel tire enterprises may continue to rise, and that at semi-steel tire enterprises will possibly remain high. Yet, the semi-steel winter tire production has basically finished, so the semi-steel tire production is expected to slow down slightly due to the lack of new orders.
Cost: In the short term, China’s butadiene market price is expected to inch up. There may be limited spot resources available for merchant sales, and the low-priced resources may decrease. Thus, the supply may bolster the butadiene market somewhat. Without low-cost resources, traders are likely to show limited interest in selling goods at low prices. The downstream demand is expected to be stable, and some downstream users may be cautious about high-priced butadiene prices. Players are advised to pay attention to the actual trading after the butadiene price rises.
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