Anticipated Restart of China ESBR Units
Introduction: Up to the end of July 2021, China’s ESBR producers amounted to 11, with a capacity of 1,470kt/a. The samples cover all ESBR producers in China. Therein, two producers are located in North China with the capacity of 350kt/a, 4 in East China with the capacity of 480kt/a, 2 in South China with the capacity of 150kt/a, 2 in Northeast China with the capacity of 340kt/a and 1 in Northwest China with the capacity of 150kt/a.
July operating rate of ESBR units inched down M-O-M
The monthly average operating rate of China’s ESBR industry was 64.26% in July, down 0.54% M-O-M. The operating rate at Shen Hua Chemical Industrial decreased, and that at Nanjing Yangzi Petrochemical and Rubber inched up. Hangzhou Yibang Rubber’s unit remained shut. Other ESBR units were under normal production.
In July, only the operating rate at Shen Hua Chemical Industrial edged down from June. That at Nanjing Yangzi Petrochemical and Rubber inched up. That at others such as Sinopec Qilu Company, PetroChina Lanzhou Petrochemical and PetroChina Fushun Petrochemical was stable. The prices of feedstock butadiene and styrene went down, so production costs dwindled. However, ESBR producers still faced profit losses, resulting in a slight decrease in industrial operating rate. The units at Tianjin Lugang Petroleum Rubber and Fujian Fuxiang Chemical remained shut.
In July, China’s ESBR market prices first fell and then slightly rebounded. Reasons for the price decrease: The operating rate of the downstream tire industry was low, and demand for SBR did not improve. The prices of Shanghai natural rubber futures dropped to below RMB 12,000/mt, impacting the SBR market. Besides, the prices of butadiene and styrene moved sideways, providing limited support to the SBR market. As a result, SBR mainstream prices went down. At the end of July, as the prices of Shanghai natural rubber futures rebounded, SBR offers rose by RMB 200/mt, and SBR market prices trended up. However, downstream plants continued the just-needed procurement of SBR, so the spot sales were small. The continuous increase in SBR prices came under pressure due to scant demand. In July, the theoretical profit from producing ESBR was RMB -1,006/mt, up RMB 534/mt M-O-M. This month, China’s ESBR prices dropped to RMB 12,200/mt, and the prices of feedstock butadiene and styrene went down. The overall decrease in ESBR prices was limited in July, so the marginal benefit rose.
In August, Hangzhou Yibang Rubber’s ESBR unit is scheduled to resume production. PetroChina Jilin Petrochemical, PetroChina Lanzhou Petrochemical and PetroChina Fushun Petrochemical will probably maintain their operating rates. The operating rate at Shen Hua Chemical Industrial is predicted to edge down. Other ESBR units are predicted to be under stable production in August. The average operating rate of China’s ESBR industry is estimated at 65% or so in August, largely unchanged from July.
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