Aug China HCBR Price Hovered at Lows
Introduction: In August, China’s HCBR market price hit an annual low due to a cost decrease and increasing supply pressure, and the price dropped by RMB 2,750/mt from the highest of RMB 14,750/mt this year.
China’s HCBR market prices fluctuated downwards in August. As of August 30, the closing price of HCBR 9000 in the North China market was RMB 12,000-12,500/mt, down 9.26% from the end of July.
Butadiene prices significantly dropped in H1 August. The tight supply eased with the operation of the newly added unit and restart of some units, and low-priced HCBR resources were sufficient in some regions. Thus, the overall market price went down. Demand did not improve, and the hot weather caused tire enterprises to carry out peak-shaving production. Consequently, tire enterprises were weak in feedstock consumption, and procurement was stagnant. In addition, speculators’ enthusiasm faded away amid the price decrease. Soft demand dragged HCBR prices down. In mid-August, as HCBR market prices dropped to a low level, buyers stocked up. Therefore, HCBR market prices stopped going down. In late August, HCBR market prices fluctuated within a narrow range cubed by soft demand.
Supply: The average operating rate of China’s HCBR industry in August was 71.73%, up 4.66% M-O-M and up 12.31% Y-O-Y. The reasons were as follows: As for the state-owned enterprises, the unit at Nanjing Yangzi Petrochemical remained shut. Sinopec Qilu Company resumed normal production in early August. Sinopec Maoming Company restarted its unit and had two production lines run. As for private HCBR enterprises, Zhenhua New Materials (Dongying) (formerly China Zhenhua Oil) increased the operating rate. The unit that Zibo Qixiang Tengda Chemical expanded capacity went into production. Other HCBR units had no obvious changes.
In September, the supply is predicted to be relatively ample. The unit at Nanjing Yangzi Petrochemical will remain shut. Sinopec Maoming Company will probably be under normal production. PetroChina Sichuan Petrochemical starts maintenance on August 6 for about 7 days or so. TSRC-UBE (Nantong) Chemical Industrial shut its unit down for maintenance on September 7 or so for about 20 days. A 100kt/a private unit is likely to come online. Other HCBR units are predicted to maintain normal production. SCI reckons that the average operating rate of China’s HCBR industry will rise to 73% or so in September, and the output is estimated at 96kt or so.
Demand: According to SCI, the average operating rate at all-steel tire enterprises was 56.70% in August, down 0.74% M-O-M. 1. Most all-steel tire enterprises maintained stable operating rates. However, several tire enterprises in mid-August arranged maintenance, and the longest production suspension lasted for nearly half a month, dragging down the overall operating rate. 2. In some regions where production is concentrated, peak-shaving production was carried out, and seasonally low production persisted. 3. Tire enterprises continued de-stocking on the backdrop of weak demand stimulus. 4. It was heard that export orders went lower, weighing on production.
In September, the overall operating rate at semi-steel tire enterprises is predicted to inch up. 1. The production condition will probably improve in September, and production is predicted to release, but the Y-O-Y decrease will probably persist. 2. Sales in China’s domestic market are likely to ramp up owing to the OE tire sales. Besides, export orders are expected to rally. Thus, the semi-steel tire output is possible to rise.
China’s HCBR market prices are predicted to hit the bottom and hover at lows in September. In terms of demand, production and sales pressure on tire enterprises will probably persist, and prudent production is predicted to be normal in the short term. As for supply, HCBR supply is expected to ramp up as the newly added unit goes into trial production. In addition, the continuous increase in feedstock butadiene prices lacks incentive. China’s HCBR market prices are estimated at RMB 12,000-12,500/mt in September.
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