2022 China NBR Price Seasonality Analysis
Market Price Review
On the basis of NBR prices from 2015 to 2022, SCI holds that the seasonal characteristics of NBR prices from January to November 2022 are quite different from those in the past seven years. Especially the prices in February, April, July, August and October 2022 break the traditional seasonal fluctuation rules. The NBR price in the first half of 2022 was higher than the average level over the past 7 years, and it decreased gradually in the second half of this year. In August, the price began to fall below the historical average.
Chart 1 China NBR Market Price Seasonality Index
Chart 2 China NBR Market Price Trend
In terms of stages, the NBR market price remained high from the end of Q1 to the beginning of Q2 of 2022, boosted by the expected overhaul of some domestic units and the extended shipping schedule of some imported goods. However, in Q2, with the gradual weakening of the bullish effect brought about by maintenance news, the commissioning of new domestic units, and the slow recovery of downstream demand, the NBR market price began to fall.
As for the NBR market price in Q3 of 2022, it continued to decline from July to the middle of August. However, a short-term mismatch between supply and demand began in the second half of August due to continuous pre-sale at low prices and production reduction of some NBR units in East China, causing the NBR market price to rebound in late August. With the completion of pre-sale orders in the middle of September, the market price fell again, influenced by fundamentals. The market stopped falling in the middle of November. As of November 22, the average market price of 3305E in East China was RMB 19,621/mt, down 7.39% Y-O-Y. The lowest price in 2022 fell by 15.45% from that in 2021, and the highest price decreased by 2.35% from last year.
On the whole, NBR price fluctuations were closely related to changes in supply and demand fundamentals throughout the year. From 2018 to 2021, China’s domestic NBR supply and demand increased steadily, with supply growth slightly outpacing demand growth. However, the supply-demand imbalance became more pronounced in 2022. In recent years, the quality stability of Chinese-made NBR has improved, and capacity utilization rate has increased. With the addition of new capacity in 2022, China’s domestic NBR output reached a new historical high. However, due to the slow growth of the end industry, the overall growth rate of downstream demand was lower than that of supply, aggravating the supply-demand imbalance of the industry year by year. China’s NBR output in 2022 is estimated to increase by about 15% Y-O-Y, and the downstream consumption is predicted to decline by about 2% Y-O-Y. The imbalance between supply and demand was the main reason for the decline in the market price of NBR from a high level in 2022.
Chart 3 2018-2022 China NBR Output
Chart 4 2018-2022 China NBR Consumption Volume
Taking the East China market price of 3305E produced by PetroChina Lanzhou Petrochemical as an example, from 2015 to 2022 (excluding 2020), more than 80% of the price fluctuated between RMB 15,000-21,000/mt. Excluding the influence of special factors, the high prices ranged from RMB 21,000 to 23,000/mt, while the low prices ranged from RMB 13,000 to 15,000/mt. Seasonal analysis of historical prices revealed that the NBR price followed a clear seasonality pattern.
Chart 5 2015-2022 NBR Price Histogram
Chart 6 NBR Price Seasonality
Chart 7 2 NBR Price Drivers
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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