Feedstock Market Ebbed, Tire Market Remained Lukewarm

In June, prices of natural rubber plunged, dragging down prices of other related products. Meanwhile, the demand from downstream tire industry was tepid. The units at Shandong’ tire manufacturers operated at a reduced rate in H1 June, affected by the external influential factors.

Market Review of Related Products:

NR market: The NR prices plummeted in June. The launch of TSR 20, coupled with the continued trade spat between China and the U.S., aggravated the bearish sentiments in the market and led the NR futures prices to plunge at the SHFE, hitting the lowest point since 2015. The NR dominant contract price nearly dropped below RMB 10,000/mt, and the NR spot prices kept pace with the declining NR futures market. However, the downtrend decelerated in H2 June with the bearish sentiments subsiding.

SBR market: The offers in China’s ESBR market fluctuated downwards. The trading atmosphere was tepid within the month, and the sales at traders were poor. Mainstream marketing companies lowered the EXW prices of ESBR by RMB 1,400/mt, curbing the offers. The downtrend in the market restrained the buying interests. Additionally, the price of SBR 1502 was much higher than that of NR. Therefore, the procurement from end users mainly hinged on rigid needs, and the market was thinly traded. Moreover, the declined operating rates in downstream synthetic rubber industry curtailed the prices of feedstock butadiene. Under great cost pressure, the overall operating rate of China’s ESBR industry maintained around 40% in H2 June.

PBR market: The offers in China’s HCBR market declined largely. Owing to the shutdown of PBR unit at Sinopec Yangzi Petrochemical, mainstream traders were reluctant to sell at low prices, while the trading atmosphere remained tepid. As for the feedstock, the EXW prices of butadiene dropped by RMB 1,000/mt. Additionally, the NR futures prices at the SHFE plummeted because of the continued Sino-U.S. trade dispute, and the market sentiments were dampened. The mainstream supplier lowered the HCBR EWX prices for three times, which fell by RMB 1,100/mt in June. Thus, the offers in the market slipped. The downstream tire industry gradually entered the slack season, and the procurement on feedstock was made on a need-to basis. The overall trading was tepid in the market.

Tire market: The prices of all-steel tires were relatively stable in June, and no new sales policies were adopted by the manufacturers. It was heard that part of the regional distributors conducted promotion policies. The sales of all-steel tire in H2 June were better than that in H1 June, but the overall sales volume was still low. As for next month, SCI estimates that the tire consumption in the end market will accelerate with the weather getting hot. But, the soft feedstock prices will pose downward pressure on the tire prices. However, the all-steel tire prices will be mostly stable-to-rising.