PBR Price Trended Up in February, but Range-Bound in March
Snapshot: In February, the PBR price mainly continued to trend up. The average price was higher from January. The PBR price lingered at RMB 11,000-12,050/mt. The main drivers behind the price change were analyzed as follows.
In February, the PBR market price mainly fluctuated upwards. According to SCI, the HCBR 9000 market price in North China closed at RMB 11,950-12,050/mt on February 28, up 4.35% from end-January.
In February, the PBR market price fluctuated upwards, mainly bolstered by the cost. Yet, the slack sales curbed the PBR price. The feedstock butadiene price continued to rise, bolstering the PBR price. Facing higher losses, major PBR suppliers raised the EXW prices of PBR. However, traders continued to sell goods for profit, weighing on the rise in PBR price. High-priced dealings were hardly conducted. The PBR market price was lower than the EXW price. Approaching to end-February, traders were reluctant to sell at lows and raised up offers slightly, as resources for profit were consumed and downstream enterprises ushered in feedstock procurement. Dealings on rigid demand were conducted. Thus, the PBR market price recovered slightly.
Supply: The average operating rate of China’s HCBR units was 65.73% in February, down 1.54% M-O-M and down 8.55% Y-O-Y. China’s HCBR output was 87.6kt in February, down 12.05% M-O-M but up 0.23% Y-O-Y. Among state-owned enterprises, the PBR unit at Nanjing Yangzi Petrochemical and Rubber remained offline. Sinopec Maoming Company shut its unit for a short time in end-February. The operating rate of other units changed slightly. As for private enterprises, Zhenhua New Materials (Dongying) ran its PBR unit at a lower load. Shandong Shengyu Chemical and Shandong Wintter Chemical shut down their units for maintenance. Zibo Qixiang Tengda Chemical cut the operating rate. Shandong Yihua Rubber & Plastic Technology ran its PBR unit at a lower load. Overall, the average operating rate of China’s HCBR units moved down M-O-M in February.
In March 2023, the PBR supply may move up M-O-M. The PBR unit at Nanjing Yangzi Petrochemical and Rubber will remain offline. With the cost dropping, the PBR units at Shandong Shengyu Chemical, Shandong Wintter Chemical and Shandong Yihua Rubber & Plastic Technology may be restarted. Zhenhua New Materials (Dongying) is expected to run its PBR unit at a lower load. Besides, the newly added 100kt/a unit at Zhejiang Petroleum & Chemical is conducting a trial run, and is expected to produce HCBR 9000 in late March, increasing the supply in the market. It is projected that the average operating rate of China’s HCBR units may be around 68% in March, slightly up M-O-M. The ample spot supply in the market and minor recovery in demand will possibly curb the operating rate of PBR units.
Demand: In February 2023, the monthly average operating rate at all-steel tire enterprises in Shandong is estimated at 56.02%, up 31.02% M-O-M. First, as the influence of halting production in Spring Festival holiday came to an end, most tire enterprises ushered in steady production this month, leading to fairish capacity release. Second, workers constantly returned to work after the Spring Festival holiday, shortening the expected period of resuming production at tire enterprises. Thus, the operating rate increased rapidly. Third, after the Spring Festival holiday, traders replenished intensively boosted by the economic policy. The intensive sales bolstered the operating rate at tire enterprises to some extent.
SCI reckons that the operating rate of tire industry may keep rising next month. First, the weekly operating rate of tire industry is likely to return to be normal comprehensively in March, with the operating rate rising significantly in the early days. The weekly operating rate may linger at 63%-70%. Especially in early and mid-March, the operating rate is highly probable to remain high. Second, as a large number of orders came back intensively in February, the output at tire enterprises was insufficient. Thus, orders may continue to be delivered in March, bolstering the operating rate. Third, most inventory declined to a relatively low level in February. The inventory may be replenished to a normal level, underpinning the operating rate somewhat. As for the price, as some feedstock price may rise, the cost of tire production is predicted to trend up, bolstering the tire price somewhat. The rise in price may be postponed due to the minor sales peak season after holiday. Thus, the price may continue to rise after the period of replenishment promoting policy.
On the whole, the PBR price may trend sideways in March, while it is expected to move down in a short term. As seen from the fundamentals, the supply of market resources is expected to ramp up, while the demand may also trend up. The overall downstream feedstock inventory is probable to be low. The rigid demand in the market is likely to underpin the dealings. As for the cost, the release of butadiene supply may curb the PBR price in a short term. Besides, the price of Shanghai natural rubber futures is estimated to hover at lows, weighing on the PBR price. SCI reckons that the PBR market price is likely to mainly trend sideways in March and move down in a short term, lingering at RMB 11,200-11,900/mt.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
