BD Prices Hold Firm Despite Low Synthetic Rubber OR

The operating rate and price of synthetic rubber remained low recently, while the butadiene market fluctuated upwards constantly. Recently, the price spread between butadiene and synthetic rubber was within RMB 1,000/mt. The whole operating rate of synthetic rubber once dropped to 40% roughly, impacting the feedstock butadiene market slightly. Thus, why do butadiene prices hold firm albeit synthetic rubber market trends down?

The imports cut down while the exports picked up.

Since May, 2018, the butadiene import volume declined notably from Q1, 2018, as the price spread between China and imported butadiene was wide. Traders held sparse merchantable resources and mainly consumed Chinese-made resources. Besides, batches of Chinese-made butadiene resources were exported to other countries from June to July. According to incomplete statistics, there were around 10kt of butadiene resources exported to other countries from June to July, up notably from the same period of last year. The monthly butadiene supply decreased by 25-30kt. As seen from the supply side, China’s butadiene units still underwent maintenance from June to July. North Huajin Chemical Industries, Zibo Qixiang Tengda Chemical and Sinopec Shanghai Petrochemical took turnarounds during this period. Especially, the unit maintenance at North Huajin Chemical Industries and Zibo Qixiang Tengda Chemical had obvious influences on the spot market. According to statistics, the losses caused by units’ turnarounds reached around 13kt from June to July. Besides, the import volume dropped, and some Chinese-made resources were exported. Thus, the supply cut by 60-70kt in the market, which lent robust support to the butadiene prices.

Excepting synthetic rubber industry, other downstream industries still had rigid demand for butadiene.

The operating rate of China’s synthetic rubber industry once slid to 40% or even below. Private enterprises shut down the units or lowered the operating rates obviously, dragging down the demand for butadiene. According to incomplete statistics, the demand for butadiene cut by around 40kt due to the shutdown of synthetic rubber units, especially the decrease in imported resources and some contract resources. Thus, that had little impact on the spot market. The operating rate was passable in other downstream industries. The operating rates in SBS, ABS and NBR industries were relatively high, and the demand for butadiene was stable. The demand at some large-scale rubber latex enterprises held steady, and they mainly consumed the spot resources in domestic market against limited imported resources. The rigid demand lent strong support to the spot market.

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