Synthetic Rubber Prices Will Hardly Continue the Rebound
After China’s Spring Festival holiday, China’s SBR and PBR prices remained in a downtrend, hitting a new low in recent ten years, and marketing companies cut SBR and PBR ex-works prices by RMB 3,400-3,700/mt. But, in H1 April, China’s SBR and PBR marker prices rebounded, and on April 13, mainstream marketing companies raised SBR and PBR ex-works prices by RMB 200/mt. However, the rebound in synthetic rubber prices will hardly continue.
Reasons for the price rebound in H1 April were as follows: 1. The improvement of external environment boosted players’ sentiment to some extent. 2. Some middlemen or investment clients stocked up after the prices dropped to low levels, driving up mainstream market prices.
However, the rebound in synthetic rubber prices will hardly continue, and the reasons are as follows.
As for the feedstock, butadiene prices have declined to low levels. But, currently, most producers maintain normal operating rates, and there are some merchantable resources at ports. Accordingly, the spot supply of butadiene will still be abundant. However, the increase in downstream operating rates will be relatively limited. Thus, butadiene prices will hardly go up in the short term. The cost side will hardly boost the synthetic rubber market.
As for the supply, units at Zhejiang Transfar Synthetic Materials undergo maintenance from April 15 for about 20 days, and most of other SBR and PBR producers are under normal production. The average operating rate of China’s SBR industry and PBR industry is 62%-65%. The supply of SBR and PBR is predicted to be ample, and the social inventory will be high. The supply side will hardly give support to the synthetic rubber market.
As for the related product NR, mainstream NR prices are likely to hover at RMB 10,000/mt or so in the short term. But, prices of mixed rubber are higher than synthetic rubber prices at present, giving certain support to synthetic rubber prices.
As for the demand, currently, China’s tire export is hindered by the public health event at abroad. China’s tire enterprises are under heavier inventory pressure and domestic sales pressure, and they are likely to reduce output at a later stage. Thus, the demand for synthetic rubber is predicted to decrease to some extent. The demand side will weigh on the synthetic rubber market.
For all these reasons, the rebound in China’s SBR and PBR prices will hardly continue. SCI advises that players should operate flexibly.
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