PBR Price Hit New Highs in Early Oct After Fluctuating Upwards in Sep
In 2024, the PBR market price mainly fluctuated upwards and saw two significant increments in June and September respectively. The PBR market price mainly registered an uptrend in September. Entering October, it continued to rise and hit a new high of RMB 16,500/mt on October 9, and then it dropped notably.
In September, the related product prices played an important role in the PBR price trend. The natural rubber market was affected by typhoons. The continuous rainfall in major production areas aggravated players’ worries about the tight supply of natural rubber. Thus, the natural rubber price moved up rapidly. Accordingly, the price of synthetic rubber futures picked up so as to narrow the price spread between it and natural rubber. Besides, the feedstock butadiene market price mainly went upwards, putting cost pressure on PBR production. Thus, the prices of spot PBR and synthetic rubber futures both ramped up in September.
Entering October, bolstered by the strong macro environment, the futures market continued the upward trend, boosting the spot PBR market. However, with players’ bullish sentiments in the macro environment cooling down, the prices of the futures market moved down notably. Accordingly, the spot PBR price slipped somewhat recently.
In 2024, as the feedstock butadiene price went upwards continuously, and the increment was larger than that in the PBR price, China’s PBR industry faced profit losses for a long time except at the beginning of the year. In September, the PBR price climbed significantly driven by related products, and the increment was larger than that in the butadiene price, so the gross profits gradually recovered. The average gross profits at HCBR producers increased by around 34% MoM. Entering October, the support from natural rubber and synthetic rubber futures continued, so the PBR price further moved up. The gross profits continued to recover.
In September, China’s PBR and downstream all-steel tire both warmed up slightly.
As for PBR production, the overall operating rate of China’s PBR industry in 2024 dropped somewhat YoY due to long-term profit losses. In September, some PBR units were restarted intensively, so the operating rate of the PBR industry warmed up MoM, resulting in a rise in the PBR output. In September, the monthly average operating rate of China’s HCBR industry was 64.32%, up 5.51% MoM.
Regarding the demand, the operating rate of the downstream all-steel tire industry edged up somewhat in September, but it fell notably during the National Day holiday. The monthly average operating rate of the all-steel tire industry in Shandong was 58.87% in September, up 1.78% MoM. Most tire enterprises were under continuous production in September, and there were expected to be more orders during the “golden September” peak season, driving up the overall operating rate of the all-steel tire industry. Yet, the high inventory and cost still curbed the increment in all-steel tire production. Thus, the monthly average operating rate saw a small-ranged rise in September, but it fell notably due to the National Day holiday.
In October, the average market price of PBR is expected to edge up MoM, and the overall price may linger at RMB 15,500-16,500/mt.
But in the next three months, with the supply and demand weakening, China’s PBR price is predicted to trend down. The monthly average prices of PBR from October to December are expected to be RMB 16,000/mt, RMB 15,500/mt and RMB 14,800/mt respectively. In October, the monthly average PBR price is likely to be slightly higher than that in September due to the high price base, although the price may mainly register a downtrend.
In October, the PBR market price is expected to mainly fluctuate at highs. Regarding the related product, the natural rubber price is expected to remain higher than the PBR price, driving up the PBR price. With the cost falling, the cost pressure of PBR production is expected to be further alleviated, boosting producers’ willingness of production. Besides, as there may be limited PBR units to take maintenance, the overall PBR supply is likely to rebound MoM. As for demand, affected by the National Day holiday and the cost pressure, some tire enterprises may actively control production, and there may be limited new orders in the coming days, curbing the operating rate of the tire industry. With the supply-demand gap enlarging, the PBR price is expected to trend down. Yet, due to the high price base, the average PBR price may rise somewhat MoM. Overall, the PBR price is expected to drop from highs in October, lingering at RMB 15,500-16,500/mt.
Since 2020, China’s PBR capacity has been expanding rapidly. At present, China’s PBR capacity has reached 1,952kt/a. In 2025, there may be some new PBR units to go into production, and then China’s PBR capacity is expected to rise to 2,302kt/a. Therein, the 150kt/a PBR unit at Shandong Yulong Petrochemical is expected to come on stream in Q1 2025. The 50kt/a LCBR unit at PetroChina Jilin Petrochemical may go into production in Q3 2025. With the expansion of China’s PBR capacity, China’s PBR supply is likely to further ramp up, aggravating the oversupply status.
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