SBR Price Hit New High Since 2018 Fueled by Related Product and Cost
Snapshot: In June, China’s SBR market price climbed again after hovering at highs, which hit a new high since 2018. It is projected that the SBR price may trend at highs. The decline in demand will possibly slow down the uptrend of the SBR price.
In June, the SBR price hit a new high since 2018.
In June, China’s SBR market price rose again after moving sideways, which hit a new high since 2018. As of June 7, the market price of ESBR 1502 in North China closed at RMB 15,250/mt, up 7% from the last trading day. The price of synthetic rubber futures rose beyond expectations, and the feedstock butadiene price rose by RMB 800/mt from the last trading day. Although no trading was heard on June 7 as downstream tire enterprises showed strong resistance to high SBR prices, traders had no willingness to sell goods at lower prices. Some of them stopped selling amid wait-and-see sentiments.
Considering the large increment in the SBR price, SCI reckons that the SBR price is expected to trend at highs mainly fueled by high cost. Yet, the expected decline in demand may slow down the upward trend of the SBR price.
As for cost, China’s butadiene market price is likely to fluctuate at highs. Some of China’s butadiene units under maintenance are expected to be restarted in succession, but the increase in output may be limited. Besides, with some downstream units being restarted, the spot volume for outside sales at butadiene producers in Northeast China is predicted to see cutbacks. Thus, the supply may still strongly underpin the butadiene price. As for demand, most downstream enterprises are resistant to high butadiene prices and may purchase butadiene on rigid demand. However, some downstream units are expected to resume production. The rebound in demand is likely to bolster the butadiene market to some extent. Moreover, in the context of the stable operating rate of the butadiene industry, the butadiene price may continue the uptrend. As butadiene is the main feedstock of SBR, the expected uptrend of the butadiene price is likely to drive up the SBR price.
In terms of demand, the inventory base of finished tire products is likely to ramp up in June. Considering high cost pressure, most tire enterprises are expected to first consume the inventory and lower the operating rate moderately. Thus, the consumption of feedstock SBR may trend down, slowing down the uptrend of the SBR price.
As for the natural rubber price, the price of STR20# mixed rubber began to be RMB 25/mt higher than that of SBR on May 14. On May 31, the price of STR20# mixed rubber was RMB 700/mt higher than that of SBR. Yet, on June 7, the price of STR20# was only RMB 75/mt higher than that of SBR. From the perspective of substitute demand in downstream applications, the price spread between them enlarging bolsters the SBR market atmosphere, while that narrowing drags down the SBR market atmosphere. Considering the large increment in the SBR price, the price spread between natural rubber and SBR narrowed notably, underpinning the SBR price limitedly. Attention should be paid to the changes in the price spread in the coming days.
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