Jun SBS Prices Rebound After Falling
Introduction: In June, China’s SBS market price rebounded after falling. With the favorable factors in the external environment boosting players’ sentiments, the trading atmosphere of the SBS market improved somewhat, and dealings of some major grades were released somewhat.
From late May to early June, China’s SBS market prices fluctuated downwards, under the influence of cost and fundamentals. Particularly, the price trend of butadiene strongly affected the SBS prices. However, with the rebound in the international crude price and the expectations of improvements in the macro environment, the bearish sentiments of players gradually ebbed, and the market purchasing atmosphere warmed up, triggering the release of dealings. On June 13, PetroChina Southwest China Marketing Company and PetroChina South China Marketing Company were the first to raise the SBS prices, and then some players held bullish sentiments. Besides, the feedstock butadiene price rebounded, bolstering the uptrend in the SBS prices. Up to June 18, the delivered price of 792E in East China market closed at RMB 13,150/mt, up 4.37% from the lowest point of RMB 12,600/mt on June 9.
Forecast:
Cost: In the short term, the butadiene market price is expected to edge up. As for supply, many butadiene units are expected to take maintenance. The merchantable butadiene resources are likely to decrease, bolstering the butadiene price. Regarding demand, downstream plants may mainly replenish butadiene on a need-to basis at low prices, and they are likely to be cautious about receiving goods at high prices. Thus, the demand is expected to bolster the market limitedly. The crude oil market atmosphere is predicted to be strong, driving up the downstream market atmosphere.
Supply: In June, China’s SBS supply is anticipated to be at a high level of H1 2025. Except for Sinopec Beijing Yanshan Company, most SBS units will likely run normally. Particularly, the operating rates of private SBS units may grow notably. Thus, China’s SBS output may hit a high of H1 2025. SBS sales will likely face pressure. Overall, the supply is expected to curb the SBS price.
Demand: The operating rate of the main downstream industries of SBS is likely to improve limitedly. The operating rate of the shoe material industry may be relatively weak. Some regions will likely enter the traditional slack season. As the southern regions may enter the rainy season, the construction of expressways is likely to be hampered, weighing on the demand in the modified bitumen industry. Yet, as some downstream industries may purchase SBS at low prices, the inventory at downstream plants is expected to continue to pile up.
In summary, China’s SBS market prices are expected to fluctuate upwards in the short term, but the increment may be limited. The butadiene market price may edge up. Players still need to pay attention to the changes in the international crude market and the macro environment. The strong cost and bullish sentiments will likely drive up the SBS procurement to some extent. Yet, as the fundamentals of SBS may improve limitedly, the oversupply is likely to curb the increment in the SBS prices.
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