Price Spread Between SBR and PBR Change and Forecast
Key words: SBR, PBR, Correlation, Industry profit
Snapshot: There is a strong correlation between SBR and PBR. The correlation index is over 0.96. Thus, the fall in the PBR price significantly dragged down the SBR market atmosphere. The reasons for the change in the price spread between PBR and SBR and its impact on the SBR price were analyzed as follows.
There is a strong correlation between SBR and PBR.
According to the historical data of past 12 years, the top 6 drivers with the largest correlation index are PBR monthly average price, SBR monthly average cost, butadiene monthly average price, natural rubber monthly average price, SBR monthly supply and semi-steel tire monthly operating rate respectively. As seen from the correlation index, the PBR price has the largest impact on the SBR price. The correlation index is over 0.96. Thus, the fluctuation in the PBR price affects the SBR price and the market atmosphere.
The PBR price was lower than the SBR price, weighing on the SBR market atmosphere
In 2023, the SBR price was higher than the PBR price for most time. The largest price spread reached RMB 1,100/mt. The decrease in the PBR price affected the SBR market.
The reasons why the PBR price increased and was higher than the SBR price from 2021 were as follows. The PBR unit at Nanjing Yangzi Petrochemical and Rubber was shut down briefly, and some PBR units took maintenance intensively in 2021. Thus, the annual PBR output decreased by nearly 9% Y-O-Y in 2021. Bolstered by shrinking supply, the PBR price moved up constantly. The largest price spread reached RMB 2,850/mt.
From 2023, the SBR price fell and was lower than the SBR price. In 2021 and 2022, the gross profit of the PBR industry was RMB 2,307.6/mt and RMB 1,188.76/mt respectively. Driven by fairish profit, some units under long-term shutdown were restarted. In 2022, the PBR output ramped up by around 15%. Amid increasing supply and tepid demand, the PBR price trended down more rapidly.
Up to June 14, 2023, the price of SBR 1502 in North China closed at RMB 11,100/mt, while the price of HCBR 9000 in North China closed at RMB 10,100/mt. Both of them were at relatively low levels in past 12 years. Some SBR units took maintenance, leading to shrinking supply. But the SBR price failed to rise notably curbed by the decrease in the PBR price.
It is estimated that the PBR price may remain lower than the SBR price in Q3, 2023.
The increase in PBR supply in 2023 was mainly due to the fairish profit. According to SCI, the operating rate of most PBR units is expected to maximize in Q3, leading to an ample supply. As for the demand, the end demand in China’s tire market recovers slowly. With the tire production and sales turning weak, the inventory at tire enterprises is likely to be higher than the normal level. Thus, the operating rate of the tire industry may trend down. The supply-demand fundamentals are predicted to fail to bolster the PBR price. Besides, the prices of natural rubber and feedstock butadiene are expected to underpin the PBR price limitedly. Thus, the PBR price may remain falling in Q3. It is projected that the PBR price may remain lower than the SBR price, weighing on the SBR market atmosphere.
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