Some SBR and PBR Units to be Restarted in China

SCI99

2020-05-29

Some SBR and PBR Units to be Restarted in China

In 2020, the core factor restricting the development of SBR and PBR markets, the tight supply of butadiene, will be reversed, and the profitability of its major downstream industries will significantly improve. Some enterprises under long-term shutdown plan to restart units, and then new changes will be seen in China’s supply of SBR and PBR.

From 2019, the marginal benefit of China’s SBR and PBR industries improved, and in 2020, the gross profit of SBR and PBR continued rising to over RMB 1,000/mt, mainly as butadiene prices declined. Butadiene prices and the prices of its downstream producers hit the lowest in recent ten years, influenced by the global public health event and the decrease in exports orders for the end products such as tires and home appliances. There was 340kt/a newly added butadiene capacity in Q1, 2020. In the second half of this year, there will be four newly added butadiene units. Butadiene supplies arranged resource digestion in advance and actively cut prices for downstream users, so the relative decline in butadiene prices was larger.

The industrial operating rate rose with the improvement of profitability.

With the improvement of profitability, the operating rate of China’s SBR and PBR industries rose obviously. In H2, 2018, the operating rate of the SBR industry and the PBR industry dropped to the historical lowest of 43% and 36% respectively. In 2019. The operating rate of China’s SBR and PBR industries rose notably, and the monthly operating rate increased to over 65%, hitting a record high of recent five years. In 2020, as butadiene prices dropped to RMB 3,500/mt or so, the operating rate of China’s SBR and PBR industries increased to 70% or so. Moreover, as China’s some SBR and PBR units under long-term shutdown will be restarted successively, the operating rate is predicted to keep increasing to 70% or higher.

Units under long-term shutdown will be restarted with the improvement of profitability.

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