PBR Price to Rebound Limitedly in Mar After Dropping in Feb
Introduction: In February, the PBR price dropped from highs, and the current price fell to the level in early January. In February, the PBR mainly lingered at RMB 13,600-14,700/mt. In March, the PBR price is expected to rise limitedly.
The PBR price dropped from highs in February.
In February, the PBR market price slid. According to SCI, as of February 28, the market price of HCBR 9000 in North China was RMB 13,900/mt, down RMB 700/mt or 4.8% from the end of January. The monthly average price in February was RMB 14,226/mt, up 12.86% YoY and up 0.99% MoM. In February, the butadiene price moved down, and the recovery in the end demand underperformed, so the PBR price mainly trended down.
The butadiene price fell rapidly with butane ODH units restarting.
After the Spring Festival holiday, China’s butadiene market price fluctuated downwards. In H2 of February, the butadiene price dropped more rapidly. After the holiday, China’s butadiene supply increased, while the recovery in demand underperformed. The weak fundamentals curbed the butadiene price, leading to a quicker decrease. In February, no butadiene units took maintenance as scheduled in China, and most units ran normally. Besides, the butane ODH units at Jiangsu Sailboat Petrochemical and Jiutai Energy Inner Mongolia were restarted, supplementing China’s butadiene supply. On February 25, the delivered price of butadiene in the Shandong market was RMB 10,975/mt, falling to the level in early January 2025. With the butadiene price falling rapidly, downstream users showed resistance to purchasing butadiene when the price was falling. As the support from supply weakened, the influence of demand emerged. These days, affected by the expectations of demand recovery and maintenance of a few butane ODH units, the butadiene price rebounded somewhat.
In mid-to-late February, with the decrement in the butadiene price enlarging, the gross profits of the PBR industry recovered, stimulating some PBR producers with units being shut down to purchase butadiene. Thus, the butadiene price rebounded. At present, the gross profits of the PBR industry are around RMB -100/mt, up RMB 800/mt from early February. (Remarks: When calculating the gross profits, SCI selects Sinopec’s EXW price of butadiene and PBR, and the theoretical processing fee was RMB 3,000/mt. For different plants, the processing fee and feedstock prices may be different, so the gross profit data is just a theoretical value for reference.)
The average price of PBR is likely to move up in March.
Supply-demand: The supply-demand gap is expected to narrow, so the support from fundamentals may strengthen. In March, with the profits recovering, PBR units under maintenance are likely to be restarted in succession. Besides, Shandong Yulong Petrochemical is likely to produce PBR normally. Thus, the monthly output of PBR is expected to further rise. Yet, considering the rise in the capacity base and the unit maintenance at PetroChina Jinzhou Petrochemical and Zhejiang Transfar Synthetic Materials, the operating rate of the PBR industry is likely to edge down in March. As for demand, in March, the operating rate of the tire industry is expected to move up. First, tire enterprises are likely to maintain continuous and stable production with the influence of the Spring Festival holiday ebbing, driving up the overall operating rate. Second, the demand in the markets for OE tires, replacement tires, and exports is expected to increase, driving up the operating rate. Third, the tire inventory has been consumed somewhat due to limited production in February, so tire enterprises may show strong interest in production, resulting in a high operating rate. Overall, the supply-demand gap is likely to narrow in March. Attention should be paid to the constraints of the spot trading activeness on the upper end of the PBR price.
Cost: In March, China’s butadiene market is expected to perk up. Available butadiene resources may be relatively sufficient in the spot market. Most butadiene units may run normally. Besides, some spot butadiene may be available from the unit at PetroChina Fushun Petrochemical, failing to underpin the market from the supply. However, some shut PBR units are expected to restart in succession. Some downstream enterprises plan to uplift loads of their units. The demand for butadiene is likely to gain, propping up the butadiene price. What’s more, in April, some butadiene units are scheduled to take maintenance, and its influence on the butadiene market may emerge ahead of time in H2 March. Therefore, favorable fundamentals may lend support to the butadiene price to some extent. The market price of butadiene may rebound in H2 March. Yet, considering relatively low prices in H1 March, the monthly average price of butadiene in March may be slightly lower than last month.
Natural rubber: In March, the natural rubber price may fluctuate strongly, and the monthly average price is likely to move up MoM. As seen from the normal seasonality, in March, the global producing areas of natural rubber enter a seasonal lull period. The output of new field latex is scarce, so the feedstock price may maintain a relatively strong trend. The supply pressure of new field latex is limited, and the cost still bolsters the natural rubber price. As for the demand side, March marks a minor peak period for the resumption of work in downstream enterprises, during which the demand for feedstock may rise. However, given the current sluggish situation of the terminal consumer market, enterprises are burdened with a high level of finished product inventory. Moreover, the high cost of feedstock may, to a certain extent, influence the scale of inventory replenishment. Consequently, the support from the demand side for the natural rubber price may be rather limited. As for the policy aspect, in March, the expectations of both domestic and foreign macro policies may continue to act as a driving force behind the fluctuations in the commodity market. Moreover, fluctuations in market sentiment regarding capital may increase the overall volatility of natural rubber prices. On the whole, China’s natural rubber market may fluctuate strongly in March.
To summarize, in March 2025, the PBR market price is predicted to increase. The supply and demand may both rise. Players should pay attention to the pressure caused by insufficient demand in the all-steel tire sector. Thus, the fundamentals may fail to drive up the PBR price. The PBR price is likely to be boosted by the changes in the prices of butadiene and natural rubber.
Specifically, at present, the spread between the PBR price and cost returns to around RMB 2,000/mt at private PBR producers, so the operating rates of the PBR units after restarting are expected to be curbed. Thus, players should pay attention to the risk of a larger butadiene supply-demand gap. Players should not be too optimistic about the increment in the PBR price. Yet, the decrement in the PBR price may be also limited. As for the natural rubber market, it may be the production slack season and demand peak season in March, so the port inventory in China is expected to decrease, driving up the natural rubber price. Thus, the natural rubber price may bolster the rise in the PBR price.
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