SBR Operating Rates Forecast in Jan 2018

By late December 2017, there are 11 ESBR producers in China, with a total capacity of 1,470kt/a. The sample producers include all of China’s ESBR producers.

According to SCI’s statistics, the ESBR operating rate in China was 60.34% in December 2017, down 2.13% M-O-M and down 3.56% Y-O-Y. The operating rates at PetroChina Jilin Petrochemical, Zhejiang Weitai Rubber and Sinopec Yangzi Petrochemical were high. However, the ESBR unit at Sinopec Qilu Company was still shut down in December, dragging down the whole operating rate notably. Besides, the operating rate at Shen Hua Chemical Industrial edged down to 90% or so. Hangzhou Zhechen Rubber cut its operating rate of one production line slightly. The unit at Tianjin Lugang Petroleum Rubber was still shut down in December.

The operating rates at Sinopec Qilu Company, Hangzhou Zhechen Rubber and Shen Hua Chemical Industrial declined M-O-M, while those at PetroChina Jilin Petrochemical, Fujian Fuxiang Chemical, Sinopec Yangzi Petrochemical and Bridgestone increased M-O-M. The operating rate at other producers remained stable M-O-M.

The trading atmosphere was lukewarm in December. The operating rate at many SBR producers was high, but the buying appetites were thin in the market. Early this month, there was news heard that SBR units at Sinopec Qilu Company are likely to be restarted ahead of time, leading to the price decline. Producers exerted slight stock pressure in late December. The butadiene prices hovered at around RMB 9,400/mt. The SBR ex-works price decreased from RMB 13,200/mt to RMB 12,200/mt. The theoretical cost of China’s SBR was RMB 940/mt in December.

SBR units at Tianjin Lugang Petroleum Rubber and Sinopec Qilu Company will be restarted in early and mid-January 2018 respectively. The operating rate will see little change in other units. The operating rate will average 60% in January. However, as Sinopec Qilu Company will restart its units in late January, there will be sparse SBR resources available in the market in January. As seen from the downstream industries, some small-scale rubber enterprises plan to take on holiday, while most tire enterprises maintain normal operation. Some downstream producers are likely to stock up considering the holiday drawing near. As seen from the feedstock, the butadiene supply will be sufficient, and the price will wane. The oversupply of the natural rubber exert some pressure on the price increase, thus prices of the natural rubber will move sideways. Overall, China’s SBR prices will probably be stable in January 2018.