May PBR Price to Drop Limitedly with Low Supply
Snapshot: In April, the PBR price mainly trended at highs and dropped slightly. The overall price was higher than that in the same period of 2023. The main reason is analyzed from the perspective of fundamentals.
In April, the PBR market price fell after rising, and the average price dropped M-O-M. In early April, as the cost and the price of natural rubber futures increased, the prices of synthetic rubber futures and spot PBR both trended up accordingly. Thus, the average negotiated prices of spot PBR increased. In mid- and late April, with favorable factors ebbing, buyers held bearish sentiments in the future market and purchased PBR on a need-to basis. Although some PBR units began to take maintenance, the inventory in the market decreased limitedly. Thus, the prices of synthetic rubber futures and spot PBR both trended down under pressure. Overall, the PBR price trended at highs mainly due to the support from cost and fundamentals. Yet, the increment in the PBR price was smaller than that in cost was attributed to the expected situation of PBR fundamentals.
In May, there may be some deep-sea butadiene cargos in the Asian market, weakening the support for China’s butadiene market. Besides, with some of China’s butadiene units restarting, there is expected to be more spot butadiene resources available in the market, leading to a fall in the butadiene price. As for the PBR industry, as the cost may fall, some PBR units are likely to be restarted, resulting in a rise in the supply of PBR. In terms of state-owned enterprises, PetroChina Jinzhou Petrochemical is expected to resume production in late May. Sinopec Beijing Yanshan Company may shut its unit for maintenance for around one week. As for private enterprises, many units are highly likely to remain offline or run at lower loads. Additionally, the PBR units at PetroChina Dushanzi Petrochemical, Xinjiang Lande Fine Petrochemical, TSRC-UBE (Nantong) Chemical Industrial, and Heze Kexin Chemical are expected to begin to take turnarounds. Thus, the average operating rate of China’s HCBR industry may edge up to around 54%, up 1 percentage point M-O-M.
In May, the operating rate of the all-steel tire industry in Shandong may continue to drop. First, the operating rate of the all-steel tire industry is expected to slide intensively affected by the Labor Day holiday. At the same time, as there may be more tire enterprises suspending production during the holiday Y-O-Y, the decrement in the operating rate is expected to be larger than that in the same period of 2023. Second, as the support from new orders may be not strong, more tire enterprises are likely to be cautious about production. Third, as the inventory base has increased, sales pressure may also get heavier, curbing the operating rate of the all-steel tire industry.
In May, the PBR market price is likely to edge down. Although the PBR fundamentals may weaken, there is expected to be some support from them. As for supply, the operating rate of the PBR industry is expected to remain low, but the overall output may inch up. As for demand, the operating rate of the all-steel tire industry will possibly fall somewhat affected by the Labor Day holiday, so the overall PBR consumption volume may shrink. The PBR fundamentals are expected to change limitedly. The cost is likely to trend down, weighing on the PBR price. Yet, due to high losses, the PBR industry may mainly recover profits in the short term, so the increase in the price of spot PBR is likely to be limited.
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