2022 China IIR Market Supply Analysis
In 2022, China’s IIR import volume was 292.3kt, which increased by 34% from last year, a large Y-O-Y increase. China’s IIR operating rate remained low, and so did the overall operating rate of the downstream tire industry given the market demand and capacity release. Overall, the IIR market supply was strong, while the demand was weak in 2022, which had a negative impact on the market price.
2022 IIR Import Volume Saw Significant Increase
According to GACC, the IIR import volume was 292.3kt in 2022, up 34% Y-O-Y. Therein, the import volume of regular IIR was 107.4kt, up 27.8% Y-O-Y, and that of HIIR was 184.9kt, up 38% Y-O-Y. The import volume increase was attributed to the larger-than-expected increase in import volume from Russia. In 2022, the import volume of IIR from Russia was 167.4kt. Therein, the import volume of regular IIR was 84.7kt, which was nearly 1 time higher than that in 2021, and that of HIIR was 82.7kt, up 310% Y-O-Y.
2022 IIR Import Price Increased with High Feedstock Price
China’s MTBE prices fluctuated downward but moved upward twice in 2022. As of December 30, 2022, China’s MTBE prices averaged RMB 7,359/mt, up RMB 1,637/mt or 28.61% Y-O-Y. China’s MTBE prices rose twice from January to October 2022, as the notable increment in the international crude oil prices underpinned MTBE costs and the significant rise in China’s MTBE export volume resulted in the decline in China’s MTBE supply. The highest MTBE price once reached RMB 8,764/mt in H1 of 2022.
Given the high feedstock price and exchange rate, China’s annual average import price of IIR increased from last year. It can be seen from the chart below that the annual average import price of Russian resources saw minor increases. In 2022, the annual average import price of regular IIR was $1,678/mt, up 4% Y-O-Y, and that of HIIR was $2,331/mt, up 3% Y-O-Y. There was a large difference between IIR and feedstock price increases. The average price of HIIR resources from Canada was $2,825/mt, up 20% Y-O-Y.
2022 China IIR Operating Rate Remained Low
China’s domestic producers underwent different degrees of maintenance in 2022. The IIR unit at Panjin Cenway New Materials was overhauled in February, and Zhejiang Cenway New Materials’ IIR unit was overhauled from July to August, although it was restarted in September, the 70kt/a unit at Shandong Chambroad Sinopoly New Material ushered in maintenance. In Q4 of 2022, the overall operating rate of China’s domestic IIR units decreased by a large margin as the 70kt/a unit at Shandong Chambroad Sinopoly New Material was shut down from November to December and Panjin Cenway New Materials stopped production in the middle of December. In 2022, China’s IIR operating rate hovered within 40%-80%, and the annual average operating rate was 69%, which decreased by 11% from that of 2021.
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