SBR Supply to be Sufficient in December

According to SCI’s statistics, the operating rates of China’s SBR units averaged at 62.47% in November 2017, up 0.31% M-O-M and up 1.03% Y-O-Y. The profits at SBR producers were high, benefiting from the low butadiene prices this month. For instance, the operating rate at Shen Hua Chemical Industrial, Zhejiang Weitai Rubber, Fujian Fuxiang Chemical and PetroChina Jilin Petrochemical improved from last month. However, the unit at Sinopec Qilu Company was shut down in mid-November, and the unit at Bridgestone (China) Investment was shut down from November 18 to November 24. In general, the whole operating rate remained flat. The SBR unit at Tianjin Lugang Petroleum Rubber was still shut down in November.

The operating rates at Sinopec Qilu Company and Bridgestone (China) Investment declined from last month. The operating rates at PetroChina Jilin Petrochemical, Fujian Fuxiang Chemical, Hangzhou Zhechen Rubber and Shen Hua Chemical Industrial increased from last month.

In early November, Sinopec Qilu Company planned to shut down its SBR unit from mid-November 2017 to March 2018. Thus, the market supply was expected to decrease sharply. Accordingly, traders were reluctant to sell resources. The butadiene price fluctuated within RMB 8,500-9,200/mt in this month. The SBR prices of mainstream grades fluctuated within RMB 12,700-13,200/mt. The butadiene prices were relatively low, and the supply was sufficient. Thus, the profits from SBR producers were high. Theoretical cost of China’s SBR was RMB 1,050/mt in November.

The SBR unit at Sinopec Qilu Company will continue to be shut in December. The operating rates of units at Hangzhou Zhechen Rubber, Zhejiang Weitai Rubber, Shen Hua Chemical Industrial and PetroChina Jilin Petrochemical will be high in December. The supply will be sufficient excluding that at Sinopec. In addition, demand from downstream users is high. The butadiene supply is also ample, and the butadiene price is expected to go weaker. Besides, prices of natural rubber will continue declining. Thus, SCI estimates that SBR prices will see few movements in December.