Oil-Extended SBS Market Price Fluctuated Downwards Amid Insufficient Support
Snapshot: In recent two months, the oil-extended SBS market price showed a reverse V-shaped trend, affected by the cost and fundamentals. In a short run, the butadiene market price is likely to be range-bound. The demand is expected to warm up, but the overall orders may be scant. The oil-extended market is predicted to be in the tug of war between bullish and bearish factors. The SBS market price is estimated to fluctuate downwards, while the decrement may be minor.
From early January, the SBS market price first rose, and then fluctuated narrowly, mainly affected by the feedstock price and fundamentals. Up to early March, the increment in market demand underperformed, and the social inventory was consumed slowly. The market price was relatively low. The prices of negotiation and dealings were frequently lower than the EXW prices. Up to March 9, the delivered price of F875 in Fujian market was RMB 12,700-12,800/mt, up 3.66% from early January, but down 2.67% from end-February.
From early January to early March, the SBS market price was mainly affected by the cost, supply and demand.
As for the cost, the market prices of butadiene and styrene trended differently. The butadiene market price increased notably, strongly propping up the rise in the oil-extended SBS price. The overall butadiene market price rose first and then inched down. The monthly average butadiene prices in Jiangsu-Zhejiang market in January and February were around RMB 8,488/mt and RMB 9,561/mt respectively, which were 23.27% and 12.65% higher M-O-M respectively. Yet, in early March, the butadiene market price edged down, leading to waning support to SBS market price.
The supply increased limitedly, while the recovery in demand underperformed, dragging down the market to some extent. In January and February, some major plants produced steadily. Sinopec Maoming Company gradually resumed normal production of oil-extended SBS, leading to rising supply in the market. Besides, shoe material plants shut down early before the Spring Festival holiday and resumed production relatively late after holiday. Additionally, shoe material plants ran their units at insufficient loads after resuming production. With limited newly conducted orders, they showed scarce appetites for purchasing high-priced resources, and mainly procured on rigid demand. Some plants basically consumed the inventory in February. However, as the supply at Sinopec Maoming Company may increase and the output at Huizhou LCY Elastomers is expected to drop, the overall supply in the market may change slightly. In early March, the demand may rise limitedly, and previous oil-extended resources for profit will be possibly sold out. Affected by the low dealing prices and dropping feedstock prices, players are predicted to stay on the sidelines.
In a short term, the oil-extended SBS market price may inch down. First, the demand in the market is expected to improve somewhat. As the inventory stocked ahead may be gradually consumed and new orders will be possibly determined by negotiation, there is expected to be some rigid demand in the market, but it may limitedly bolster the market and fail to reverse the downtrend of the market. Second, the major feedstock price is estimated to be range-bound. Some oil-extended market price may be close to the average cost of traders. As seen from the cost, the oil-extended SBS market price may not decrease notably.
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