Summary of PBR Market in H1, 2023: H1 PBR Price Fell After Rising, and H2 to Climb Limitedly
Keywords: PBR, H1, 2023, Price, Cost, Forecast
Snapshot: In H1, 2023, the PBR price rose first, and then fluctuated downwards. The decrement almost offset the previous increment. In H2, 2023, there may be several bearish factors in the market. The change in cost and actual recovery in demand are expected to be the key to the rise in the PBR market price. The review of the PBR market in H1, 2023 and the forecast in H2, 2023 were presented as follows.
Review: The PBR price rose first and then fell to the level at the beginning of 2023.
In H1, 2023, the PBR price rose first and then fluctuated downwards. The price trend was generally in line with the forecast in 2022-2023 China PBR Market Annual Report. But as the feedstock butadiene market price decreased, the cost of PBR declined beyond expectations. The highest price and the lowest price were both lower than those that we predicted. The average price fell back Y-O-Y. Up to June 28, the price of HCBR 9000 in North China was RMB 9,850/mt, down 0.5% from January 4. The highest price of H1, 2023 was RMB 12,000/mt in end-February, which was 19.46% lower than the highest price of H1, 2022. The lowest price of H1, 2023 was RMB 9,850/mt on June 28, which was 22.4% lower than the lowest price of H1, 2022. The average price of H1, 2023 was RMB 10,826.9/mt, down 8.85% from H2, 2022 and down 20.95% Y-O-Y.
The seasonality analysis was based on the historical PBR prices since 2010. In 2023, the seasonality of the PBR price was different from that in the recent 12 years. The overall fluctuation was relatively narrow, and the seasonal change was not obvious. As seen from the price relative level in the recent 12 years, the monthly average prices in 2023 were lower than the average price of the recent 12 years, mainly due to the supply pressure in 2023.
The PBR price trend in H1, 2023 can be divided into two phases.
Rising phase: In January and February 2023, the PBR price mainly trended up. Yet, it halted the rise and began to drop in end-February or early March. In Q1, the operating rate at PBR producers was relatively low. But in February and March, the overall demand recovered rapidly, despite the low employee attendance rate at tire enterprises in January. On the whole, the PBR fundamentals were positive in Q1. The PBR market price changed sharply mainly due to the change in cost and market expectations. Meanwhile, the frequent macro risks and tepid commodity market environment affected the natural rubber market, aggravating the bearish expectations of the PBR market trend. Therefore, the PBR market price halted its rise at the beginning of March and began to decline.
Falling phase: From early March to end-June, the PBR price mainly fluctuated downwards. As for the supply, the PBR units at Xinjiang Lande Fine Petrochemical, TSRC-UBE (Nantong) Chemical Industrial, Sinopec Shanghai Gaoqiao Petrochemical and Liaoning North Dynasol Synthetic Rubber were shut down for turnarounds for a short time. But as the PBR units at Shandong Wintter Chemical, Shandong Shengyu Chemical, Shandong Yihua Rubber & Plastic Technology and Zhejiang Transfar Synthetic Materials resumed to normal production, and the newly added unit at Zhejiang Petroleum & Chemical came online, the PBR supply ramped up overall. Besides, the PBR unit at PetroChina Daqing Petrochemical took overhauls in June, but the overall fundamentals were relatively bearish as the industry slack season in Q3 was approaching. The high inventory pressure of spot natural rubber remained, so the natural rubber price still hovered at lows. Although the butadiene units took maintenance intensively in Q2, low-priced imported resources flew into China’s market. Thus, the butadiene price in Jiangsu-Zhejiang market decreased by around RMB 3,800/mt in total. The significant decline in cost strongly dragged down the PBR price.
Fundamentals Review: The total supply increased, the demand recovered notably Y-O-Y, but the gross profit crashed Y-O-Y.
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