China Soft Demand for Oil-Extended SBS

China Soft Demand for Oil-Extended SBS

In November 2019, SCI monitored China’s six oil-extended SBS producers, and the samples covered five of them in this analysis. Therein, two producers are located in East China, 2 in South China and 1 in Northwest China.

In Q4, 2019, China’s oil-extended SBS producers took overhauls, shut the units down or converted to produce other products. In October, China’s oil-extended SBS output was 18.9kt or so. It is estimated that the oil-extended SBS output will be 20.7kt in November. From late September, PetroChina Dushanzi Petrochemical didn’t put the unit into operation as scheduled, and also influenced by China National Day holiday, the oil-extended SBS supply decreased to some extent. Moreover, Sinopec Maoming Company took overhaul for about half a month. As a result, the overall output decreased somewhat. In November, Huizhou LCY Elastomers will convert to produce other unconventional oil-extended SBS grades, which may boost the market in the short term. However, the circulation of PetroChina Dushanzi Petrochemical’s and Sinopec Maoming Company’s resources is normal, and it is heard that private enterprises will produce new grades. Thus, the output of oil-extended SBS will increase in November.

Recently, China’s oil-extended SBS market prices trended down, and the price spread between suppliers enlarged gradually. In particular, PetroChina South China Marketing Company cut oil-extended SBS T171E ex-works prices to RMB 10,300/mt, aggravating market participants’ bearish sentiment. Downstream users were prudent in procurement on the whole.

China’s oil-extended SBS market prices may fluctuate downward in the future, and the feedstock and demand will still be the key factors affecting market participants’ sentiment.

As for the feedstock butadiene, the international butadiene prices are low, and butadiene units in northern China resume production. Thus, China’s butadiene market prices trend down. Considering the price spread between Sinopec and other suppliers, market participants hold a strong wait-and-see sentiment. As for the demand, the demand from the TPR industry hardly improves. The oil-extended SBS grades increase in the market, so downstream users have more choices. Moreover, the new orders are limited. Thus, producers decrease the prices continuously. On the whole, China’s oil-extended SBS prices will fluctuate downward in November.

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