What Emboldens Constant Increases in BD, SBR and PBR Prices?
Synthetic rubber - China’s SBR and PBR prices have surged quickly since October.
According to SCI’s price statistics, from early October to October 21, SBR and PBR producers uplifted the ex-works prices 5 times in total, and the ex-works price climbed by RMB 1,500-1,800/mt. By October 21, the market price of ESBR 1502 closed at RMB 11,100-11,300/mt, up 46% compared with the lowest price in 2020 and up around 6% Y-O-Y. The market price of HCBR 9000 closed at RMB 10,500-10,700/mt, up 46% compared with the lowest price in 2020 while down 6% Y-O-Y.
In the first three quarters of 2020, the supply of Chinese-made SBR and PBR was relatively sufficient, and imported SBR and PBR resources arrived at ports constantly. Prices of natural rubber, butadiene, etc. surged constantly. With the economic recovery in the post-COVID period and the increase in demand and capital, prices of the above products have risen quickly in Q4.
Butadiene - New supply short of expectations and fairish downstream demand
China’s butadiene market price continued to go higher after the National Day holiday. From October 15, the market price of butadiene in China surged. Within this week, the market price of butadiene increased by nearly 10% every day in 3 successive days. By October 21, the market price of butadiene in Jiangsu was RMB 9,500/mt, up 45% from late September. For the time being, the operating rates of most downstream industries were high, so the demand strongly bolstered China’s butadiene price, especially in the NBR latex industry and ABS industry. The operating rate of NBR latex used in the disposable glove industry and ABS industry both exceeded 100%.
There are many newly added butadiene units going into production in 2020. According to SCI, by late October, 800kt/a butadiene units are planned to be newly added. However, affected by production and other uncertainties, the output from newly added units is only around 350kt. The release of newly added capacity doesn’t perform as well as expected. Thus, the butadiene resources are tight slightly. The whole industry including NR futures, tire, automobile, etc. performs well, driving up players’ sentiment. In the short run, boosted by the bullish atmosphere, China’s butadiene price will go higher. However, with the sharp increase in butadiene price, players should raise risk awareness.
NR - NR price soared to the highest from March 2018.
