China Oil-Extended SBS Supply Was Largely Unchanged in May

In May, the planned output at each producer increased slightly from last month, and the supply volume totaled about 20kt. Therein, Sinopec Maoming Company and PetroChina Dushanzi Petrochemical were under steady production, and the planned output had no obvious changes than that in previous period. The amount of Sinopec Baling Company’s resources increased. Huizhou LCY Elastomers planned to reduce the output, and it was heard that the company had switched to produce dry SBS in H1 May for half a month or so. At present, the resources were unequally distributed in East China and South China. East China was faced with the heavy inventory of PetroChina Dushanzi Petrochemical’s resources. Besides, with the release of private resources, it was common that resources were sold at low prices. Thus, the ex-works prices trended down.

The producers reduced the output in May, giving support to the market. However, this support was not strong due to the tepid demand. Moreover, the Sino-U.S. trade war had revived in H2 May, resulting inmore bearish atmosphere in the market. Approaching to the end of this month, the feedstock butadiene price rose to RMB 8,400/mt. Afterwards, synthetic rubber prices inched up. However, the actual transaction may underperform after the price increases. Furthermore, the fluctuation in rubber prices provide limited support to the oil-extended SBS market. Since the Spring Festival holiday, oil-extended SBS prices have been in slight ups and downs. China’s oil-extended SBS market is amid strong wait-and-see atmosphere. In the short run, China’s oil-extended SBS market prices will continue to move sideways.