SBR Market Price Trends at Highs in May, and Decrement to be Minor in June
Snapshot: In May, the butadiene price remained high, and the NR price trended up, driving up the SBR market price. The butadiene price is likely to drop in June, but the decrement may be minor, lending some cost support to the SBR market. Thus, the SBR price is expected to trend down in June, but the decrement may be limited.
In May, the SBR price fluctuated upwards driven by cost and related products.
In May, the SBR market price mainly fluctuated upwards, and the average price edged up. The main reasons for the rise were as follows. The feedstock butadiene price rebounded after falling and still trended at a high level, bolstering the SBR market. Besides, the NR market price moved up, driving up the SBR market price to some extent.
The prices of feedstock remained high, underpinning the SBR price.
In May, the prices of feedstock butadiene and styrene both showed V-shaped trends. The highest price, the lowest price and the average price of butadiene were RMB 11,700/mt, RMB 10,975/mt, and RMB 11,482/mt, respectively. The highest price, the lowest price and the average price of styrene were RMB 9,750/mt, RMB 9,295/mt, and RMB 9,497/mt, respectively. The prices of feedstock butadiene and styrene remained high, bolstering the SBR price. In mid-May, the supply of butadiene resources in the market was relatively ample, and it was expected that there would be butadiene resources available at Shandong Jincheng Petrochemical in late May, dragging down the butadiene market price. Besides, sales at some butadiene producers for outside sales were unsmooth. Thus, the butadiene market price slid continuously. Yet, in late May, the butadiene output at Shandong Jincheng Petrochemical was lower than expected, and there were sparse spot butadiene resources in the market, so the sales pressure at butadiene producers was passable, resulting in a rise in the butadiene price.
The price of STR20# mixed rubber perked up, boosting the SBR price.
In May, affected by the slow rise in the volume of new field latex and the decrease in NR imports, the spot inventory of NR declined continuously. Thus, the price of NR trended up and became higher than that of SBR in May with the price spread showing a widening trend. In May, the largest price spread between NR and SBR was RMB 700/mt. The prices of NR and SBR are highly correlated as NR and SBR can substitute each other in downstream applications. The NR market price remained higher than the SBR price, driving up the SBR market price.
The tepid demand curbed the increment in the SBR price.
In May, the exports of semi-steel tires performed well, underpinning the operating rate of the semi-steel tire industry, which lingered around 80%. However, as for the all-steel tire industry, sales in China’s replacement tire market faced pressure, so the inventory of finished products piled up, leading to a slight fall in the operating rate of the all-steel tire industry, which was around 65%. At the same time, downstream industries continued to purchase SBR on rigid demand in small batches amid resistance to high-priced SBR resources. Thus, the demand was relatively insipid, curbing the increment in the SBR market price.
Bolstered by cost, the decrement in the SBR price is expected to be limited in June.
In June, the SBR price is predicted to drop, but the decrement may be minor.
Cost: Zhejiang Satellite Petrochemical and Sinopec Zhongke (Guangdong) Refinery plan to resume production in June, resulting in a slight rise in the supply of spot butadiene. Yet, the overall sales pressure in the butadiene market may be minor, so the butadiene price is likely to remain high, and the decrement will be possibly minor, underpinning the bottom of the SBR price.
Related product: The supply of NR resources may increase in June. Additionally, with the market price being high, downstream users may purchase NR on rigid demand. Thus, the supply and demand are expected to drag down the NR price, leading to a slight fall in it.
Supply & demand: In June, the production line at Shen Hua Chemical Industrial shut before is likely to be restarted in mid-June. Some SBR units may run at lower loads. Thus, the supply of SBR resources is expected to dip. The exports and domestic sales at all-steel tire enterprises may face pressure in June, resulting in a fall in the operating rate of the all-steel tire industry. At the same time, downstream users will possibly continue to purchase SBR on rigid demand in small batches, so the demand may hardly improve. The supply-demand fundamentals are expected to drive up the SBR market price limitedly.
Overall, the SBR price is predicted to drop in June, but the decrement may be limited.
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