China HCBR Supply to Inch Up in July
Introduction: In June, China’s HCBR market prices rose to RMB 14,800/mt and then fluctuated downwards against the backdrop of tepid demand. The HCBR average market price in July is predicted to be lower than that in June, as the overall tire operating rate will hardly increase.
China’s HCBR market prices first rose and then went down in June, and heading into July, the prices continued falling. As of July 12, the closing price of HCBR 9000 in the North China market was RMB 13,400-13,600/mt, down 3.6% from the end of June and up 2.27% from the same period of last year.
In June, butadiene prices were high, and some PBR units were shut down temporarily, boosting the HCBR market. However, after HCBR prices rose to a high level, traders’ replenishment faded away, and at the same time, downstream demand did not improve. Therefore, negotiations on high prices came under pressure, and HCBR market prices fluctuated downwards. Heading into July, the market situation did not turn better.
Supply: The monthly average operating rate of HCBR units was 67.52% in June, down 1.3% M-O-M and up 7.19% Y-O-Y. China’s HCBR output was 85.2kt in June, down 4.5kt M-O-M. In June, as for the state-owned enterprises, the unit at Nanjing Yangzi Petrochemical remained shut. Sinopec Beijing Yanshan Company increased its operating rate to 100%. Sinopec Maoming Company shut the unit down in H1 June, and the restart date is to be determined. As for private HCBR enterprises, Zhejiang Transfar Synthetic Materials and China Zhenhua Oil restarted their units in H1 June. Xinjiang Lande Fine Petrochemical had one production line run in mid-June. Shandong Wintter Chemical shut the unit down in H2 June. Other HCBR units had no obvious changes.
In July, the overall supply pressure is not heavy. The unit at Nanjing Yangzi Petrochemical will remain shut. Sinopec Maoming Company’s restart date is to be determined. Shandong Wintter Chemical plans to restart its unit in mid-July. Xinjiang Lande Fine Petrochemical shut its unit down in early July and plans to restart the unit in H2 July. Other HCBR units are predicted to be largely unchanged. SCI reckons that the average operating rate of China’s HCBR industry will be 68% or so in July and show a limited M-O-M change, and the output is predicted to remain at 90kt or so.
Demand: According to SCI, the average operating rate at all-steel tire enterprises in Shandong was 56.46% in June, up 5.18% M-O-M. 1. Intensive production suspension diminished this month, driving the operating rate up. 2. The inventory declined somewhat, and most tire enterprises stabilized production. 3. Considering that the weather will gradually turn hot in the later period, the production condition will underperform that in the earlier period, so production slightly improved. The increment in tire operating rate was small, so the demand for PBR was limited, weighing on the PBR market.
The operating rate at all-steel tire enterprises is predicted to hardly rally in July. 1. Some areas will usher in staggered shifts on production due to high temperature. 2. Tire industry is in the de-stocking period, and the support from demand is not strong. 3. The market improvement will probably be limited in the short term, and the increment in tire enterprises’ sales is predicted to be small. The market sentiment will probably remain lukewarm.
The overall supply pressure is not heavy in July, as some China’s PBR units are under production suspension. However, the overall operating rate of the all-steel tire industry is predicted to hardly ramp up due to sales and inventory pressure, as well as the hot weather, which may drag down HCBR prices. Besides, the prices of butadiene and Shanghai natural rubber futures are predicted to hardly facilitate the PBR market. Therefore, SCI reckons that the monthly average price of HCBR in July will go lower from June.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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