Oct SBR Price to Rise After Unexpected Rally in Sep
Introduction: In September, China’s SBR market price rose beyond expectations mainly driven by the rise in the price of natural rubber futures. It is predicted that the SBR price is more likely to rise than fall in October, lingering at RMB 16,500-17,500/mt. The uptrend in the SBR price may be mainly due to the rise in the natural rubber price and the support from the resilient cost.
In September, China’s SBR market price continued to perk up. As of September 30, the market price of ESBR 1502 in North China closed at RMB 16,600/mt, shattering the record of 2024 again and hitting a new high since 2018. From the perspective of the SBR price fluctuation characteristics after 2018, the SBR price in September 2024 was higher than the maximum level of the past seven years.
The main reasons for the unexpected growth in the SBR price in September were as follows. First, the prices of synthetic rubber futures trended up driven by the uptrend in the natural rubber price. Accordingly, the SBR market atmosphere warmed up, so the spot SBR price climbed notably. Second, marketing companies raised their prices of SBR. In September, the EXW prices of ESBR 1502 rose by RMB 1,300/mt in total, up around 8.4%. With the increase in the cost of spot resources, traders gradually raised their selling prices of SBR. Third, the feedstock butadiene price moved up, underpinning the SBR market atmosphere.
In October, the SBR price is more likely to rise than fall.
SCI reckons that the SBR price is more likely to rise than fall in October. The natural rubber price may trend up, so the spot natural rubber price is expected to remain higher than the SBR price, boosting the SBR market. Besides, the decline in the butadiene price is likely to be limited, which may underpin the bottom of the butadiene price. The supply-demand fundamentals will possibly fail to drive the SBR price in a certain direction. Attention should be paid to the influence of buyers’ resistance to the high SBR price.
Natural rubber: As the PBOC launched a series of monetary policies to provide strong support for the commodity market, market risk appetite has warmed up, and the commodity operation atmosphere has improved. Besides, the purchasing price of natural rubber feedstock may remain firm, strongly driving up the natural rubber price. The fundamentals are also expected to bolster the rise in the price. Additionally, the market holds positive expectations for the natural rubber price. Therefore, the natural rubber price is expected to fluctuate upwards in October, strongly underpinning the SBR price.
Cost: China’s butadiene market price is expected to drop in October, but the decrement may be minor. In early and mid-October, the butadiene market price may remain high with limited supplement of butadiene resources. However, in mid-to-late October, the imported resources are likely to arrive at ports in bulk, and the volume of butadiene resources for merchant sales may increase as for some units as well as the expected trial run of the new unit. Thus, the butadiene market atmosphere is expected to ebb, resulting in a fall in the butadiene price. Yet, considering the planned turnarounds of the 130kt/a butadiene unit at Sinopec-SK (Wuhan) Petrochemical and the 180kt/a unit at Fujian Refining & Petrochemical in mid-to-late October, some downstream users are expected to purchase butadiene from the market, curbing the fall in the butadiene price.
Supply: The SBR unit at PetroChina Jilin Petrochemical is expected to be restarted on October 14. The unit at PetroChina Lanzhou Petrochemical may take maintenance on October 20, which may last for 20 days. Shen Hua Chemical Industrial will possibly cancel the plan of production cuts in October. Overall, the SBR supply is likely to stabilize in October, but the SBR resources circulating in the market may be not ample. Demand: Downstream tire enterprises may have some rigid demand during the demand peak season in October. Yet, during the National Day holiday, many all-steel tire enterprises suspended production and arranged unit maintenance, strongly dragging down the operating rate of the all-steel tire industry in the short term. In contrast, the operating rate of the semi-steel tire industry may remain stable in October. A few enterprises may adjust their operating rate, but it is likely to affect the overall operating rate limitedly. At present, considering the high spot SBR price and the negotiation situation of SBR trading, spot SBR trading is expected to be conducted on rigid demand in October. To conclude, the supply-demand fundamentals may fail to drive the SBR price in a certain direction. Attention should be paid to the influence of downstream users’ resistance to high SBR prices on the spot trading process and the SBR price.
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