PBR Profit Is To Increase Due to Lower Feedstock Prices
The price changes of butadiene, the major feedstock of PBR, will directly influence the profit of PBR. The tire industry is the major downstream industry of PBR, so the demand from the industry also exerts influences on PBR prices. In 2019, among the whole PBR value chain, the feedstock butadiene profit is the largest, followed by the downstream tire profit, and the PBR profit takes the third place.
Butadiene is the feedstock in PBR production, so its price changes directly influence PBR’s cost. In 2019, butadiene mainstream prices trended down, resulting in the decrease in PBR production cost. Meanwhile, PBR as the feedstock in the tire production, its price changes also influence the cost of tires. As seen from the table above, the cost of PBR, butadiene and tires dropped Y-O-Y. As for the profit, the profit of PBR went up in 2019, and that of butadiene and tires declined. As for the Y-O-Y increase in the PBR profit, it is mainly caused by the low butadiene prices. As for the Y-O-Y decrease in the tire cost and profit, it is caused by not only the decrease in PBR prices but the decrease in the prices of NR, SBR, carbon black, etc.
In 2020, the butadiene capacity will continue to increase, and the more sufficient supply is predicted to cause the further decrease in butadiene prices. Accordingly, the feedstock cost of PBR and tires will continue to decrease. Meanwhile, the PBR profit is predicted to increase in the context that the feedstock prices are low.
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