SBS Market to Dip amid Poor Expectations
Snapshot: In October, the demand peak season was much lower than expected. The downstream procurement of SBS slowed down. Besides, the prices of feedstock butadiene and styrene slid. Multiple factors jointly led to a slight decrease in the SBS prices.
After the holiday, China’s SBS market overall underperformed. Major suppliers faced high sales pressure. Particularly, the prices of some major grades of dry SBS were further lower than the EXW prices. Up to October 8, the price of 792E in the Jiangsu market closed at RMB 12,750-12,800/mt, down 0.58% from September 28, showing some signs of loosening. In October, the downstream demand for SBS was much lower than expected, which was the main reason for the SBS market sliding after the National Day holiday. In addition, the prices of feedstock butadiene and styrene have been falling these days, weakening the support to the SBS market, which dragged down the SBS prices indirectly.
The prices of feedstock butadiene and styrene loosened, causing a slight decline in the SBS cost.
After the National Day holiday, the market price of butadiene dropped slightly. The weekly average price of butadiene in the Jiangsu-Zhejiang market was RMB 8,383/mt, down 2.41% from the week before the holiday. The price of styrene also fluctuated downwards. The average price of spot styrene in Jiangsu was RMB 8,588/mt, down RMB 523/mt or 5.74% W-O-W. During the National Day holiday, the price of international crude fell and the market demand after the holiday was expected to be tepid, which were the main reasons for the decrease in the SBS prices.
The supply was reduced, but it bolstered the SBS market limitedly.
In end-September, Ningbo Changhong Polymer Scientific and Technical shut its unit for maintenance, which may last for one month. Besides, some production lines at Sinopec Baling Company and PetroChina Dushanzi Petrochemical took turnarounds in October. Yet, the SBS resources available in the market were relatively ample as the inventory at some producers piled up during the National Day holiday. In addition, it was heard that some imported resources were expected to arrive at the port, supplementing some gaps in supply. The expected cut in output at major suppliers bolstered the market limitedly.
After the National Day holiday, the overall downstream demand underperformed, which may hit a low in October of recent years.
After the holiday, downstream procurement of SBS decelerated. On the one hand, downstream players held strong bearish sentiments in the SBS prices and slowed down their procurement. On the other hand, downstream orders and operating rates were expected to be weak, which had been surfacing in the pre-holiday replenishment. After the holiday, the rigid demand for road bitumen modification-used SBS was expected to decline in northern regions, especially in Northeast and Northwest China. The shoe material industry, as another major downstream industry of SBS, was still curbed by the export environment. The operating rate was insipid, especially in South China.
In the coming days, China’s SBS market prices are expected to show a downtrend in late October. The price of major feedstock butadiene may fluctuate upwards, but it is likely to affect the SBS cost limitedly. The SBS fundamentals are expected to be weak. There may be no favorable factor in fundamentals in the short term. Most suppliers will possibly face some sales pressure. Downstream players may stay on the sidelines for the prices falling and continue to slow down the procurement, leading to a slight decrease in the market prices of some SBS. SCI reckons that the SBS market prices may fall in the short term.
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