SBS: New Changes Under New Circumstances

SBS: New Changes Under New Circumstances

Although China’s SBS market witnessed the suspension of western PPP expressway construction project, the Sino-U.S. trade war, environmental protection inspection and the replacement of oil-extended SBS in shoe material marketing, SBS prices in 2018 had not been as volatile as they were last year. But the downstream demand for SBS changed unexpectedly. Therein, the demand from modified bitumen market was lower than expected; the shoe material industry shrunk quickly. The following are four “key words” in 2018 SBS market.

Export: In 2017, although China’s demand for SBS decreased, SBS exports reached a new record high. The Belt and Road Initiative has entered a critical period, and the highway construction projects around China such as PKM Expressway, KKM Expressway, PG Expressway, etc., have sprung up, which actively reduces the surplus capacity in China.

Replacement: With the development of technology, oil-extended dry SBS granulation gradually replaces oil-extended SBS in the TPR shoe material marketing, due to its lower costs and more environment friendly characteristics. Market participants need to focus on the rate of shrinking in oil-extended SBS market.

Domestic demand: The Sino-U.S. trade war is a bearish factor on export-oriented products, while it supports China’s SBS market. In 2018, the enlarged meeting of the Political Bureau of the Central Committee proposed to increase the targeted investment in infrastructure projects. The PPP expressway construction projects that were halted in the early stage re-started, and road modification-used SBS enjoyed new opportunities for development.

Direct supply: With the decrease in SBS profit, the trade mode have changed. Under the circumstance that the supply of SBS is surplus, producers go for profit and downstream users are engaged in cost control. Therefore, it is imperative to reduce the expenditure in trade circulation and raise the direct supply rate.