2024 China SBS Price Drops After Trending Up
Introduction: In 2024, China’s SBS market prices fluctuated upwards first and then dropped, which were significantly affected by cost and supply-demand fundamentals. In mid-Q4, the downstream demand weakened, so the SBS prices began to fall.
From January to October 2024, the market prices of China’s dry SBS (including road bitumen modification-used dry SBS) fluctuated upwards first and then dropped. According to SCI, the average market price of dry 792E produced by Sinopec Hunan Petrochemical in East China was RMB 14,530/mt, up 13.06% YoY.
From January to mid-October, China’s SBS market prices mainly swung up.
From January to mid-October, the market prices of China’s dry SBS mainly fluctuated upwards, but the main price drivers diverged in different stages. From January to July, the cost rose continuously, bolstering the rise in the dry SBS prices. The overall fundamentals of SBS performed weakly due to China’s SBS overcapacity, so the profits of the dry SBS industry remained negative for a long time. Against no profits at producers, the SBS prices changed in line with the trend of cost. At the same time, the price of feedstock butadiene trended up continuously. China’s and overseas butadiene units took scheduled maintenance or were shut down unexpectedly, and the feedstock of ethylene cracker was lightened, causing the butadiene supply to tighten, which underpinned the rise in the butadiene price. Although the butadiene price dropped somewhat in July, the decrement was minor. China’s dry SBS market price mainly followed the trend of the butadiene price.
From August to October, China’s dry SBS price continued to ramp up, and the price in October hit a 6-year high. The supply-demand relation became the main driver influencing the dry SBS market. The frequent unit maintenance in H1 of 2024 caused a continuous fall in China’s SBS social inventory. Although China’s dry SBS output recovered somewhat, the growth in China’s dry SBS output underperformed as the unit at PetroChina Dushanzi Petrochemical took an overhaul, the production line of road bitumen modification-used SBS at Sinopec Hunan Petrochemical remained shut for a long time, and the unit at Liaoning North Dynasol Synthetic Rubber took maintenance. With the demand warming up in late August, the SBS market was in short supply, driving up the SBS market price.
China’s SBS market prices began to fall in the wake of demand weakening.
In late October, China’s dry SBS market prices began to trend down, significantly dragged by the weakened demand. After the demand peak season, the demand from the modified bitumen industry and waterproof roll industry may gradually turn soft, hampering the SBS price transfer to downstream products. Affected by the seasonal characteristics of the SBS industry, the overall SBS demand is expected to weaken, dragging down the dry SBS prices. Besides, the price of feedstock butadiene is likely to ebb. Thus, players are expected to slow the procurement amid bearish sentiments. The SBS market may gradually change from short supply to oversupply.
Forecast: The market drivers are likely to gradually switch from the supply-demand relation to cost, which may be completed in mid-to-late November. With the downstream demand weakening, the SBS market is expected to change from short supply to oversupply, leading to a fall in the SBS prices.
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