High Social Inventory to Weigh on HCBR Market in Apr
In March, there were 17 China’s HCBR producers being investigated, with a total capacity of 1,402kt/a. Therein, 7 produces were in North China, 3 in East China, 2 in South China, 2 in Northeast China, 2 in Northwest China, and 1 in Southwest China.
HCBR Output in March Increased M-O-M.
According to SCI, in March, the HCBR output was around 86.5kt, up 13.22% M-O-M and 9.36% Y-O-Y. The reasons were as follows. As for the state-owned enterprises, Sinopec Qilu Company increased the operating rate to 100%. Besides, the HCBR output at PetroChina Daqing Petrochemical, Guangdong Sunion Chemical & Plastic and Nanjing Yangzi Petrochemical and Rubber trended up from February. The HCBR output at state-owned enterprises increased by 14.55% M-O-M. As for the private HCBR enterprises, apart from long-period shut units, the HCBR unit at Hipro New Material Technology was shut down on March 26. Other HCBR units ran normally. The HCBR output at private enterprises increased by around 8.23% Y-O-Y. Overall, China’s HCBR output in March rallied M-O-M.
In March, downstream users resumed production at a slow pace, so the demand for feedstock was insufficient. The high supply and low demand dragged down the HCBR market to some extent. Meanwhile, the global public health event spread quickly. Prices of international crude oil crashed. The constant weak macro economy environment triggered off market players’ panic. Traders lacked confidence to the coming market, so they cut the price to promote more sales. Within this month, the sales company cut the BR9000 ex-works price by RMB 2,000/mt. Yet, the BR9000 ex-works price decline didn’t stimulate buyers’ sentiment. The actual dealing was in a stalemate. By late March, the theoretical profit at HCBR producers was around RMB -150/mt. The feedstock butadiene price was at a low level. Favorable industry marginal benefit uplifted the whole operating rate. The butadiene resources were ample.
China’s HCBR output will decline in April.
According to SCI’s statistics, China’s HCBR output will reach around 78kt in April. The HCBR unit at Hipro New Material Technology will be restarted in early April. Zhejiang Transfar Synthetic Materials plans to shut its unit for maintenance around April 15. TSRC-UBE (Nantong) Chemical Industrial plans to cut its operating rate by around 10%. Other HCBR units will be largely unchanged. (Remarks: Sinopec Baling Company has transformed its 60kt/a PBR unit into the SBC unit, so China’s HCBR capacity is 1,402kt/a from November 2019.)
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