The current trend of synthetic rubber still depends on the fundamental pattern
2023/9/12
Inventory rebounded month on month
In recent years, the monthly production of butadiene rubber in China has been maintained at 60000 to 100000 tons for most of the time. Since February 2023, the monthly production has been mainly increasing, with a production of 82000 tons in February and 99000 tons in June. In July, the production slightly decreased to 96000 tons, and in August, the production increased to 106000 tons, an increase of 13.9% compared to the same period last year. The monthly production is only lower than December last year; The cumulative production of butadiene rubber in the first 8 months was 746000, higher than the 702000 in the same period last year. In terms of operating rate, the operating rate in August was 73.33%, which is a medium to high level.
In terms of enterprise maintenance, Jinzhou Petrochemical's 30000 ton/year plant will be shut down for maintenance for about 15 days starting from September 4th; Sichuan Petrochemical plans to conduct maintenance on September 15th, involving a production capacity of 150000 tons; Haopu New Materials Technology Co., Ltd.'s 60000 ton/year cis-1,4-polybutadiene rubber plant was shut down for maintenance on September 1st for a week. It has been restarting since the weekend and is currently undergoing recovery.
From the perspective of the entire supply side, the production capacity of polybutadiene rubber has continued to expand since the second half of 2022, and by the end of August, China's total production capacity of polybutadiene rubber was 1.862 million tons/year. This year, the production of polybutadiene rubber has steadily increased slightly, and the maintenance of enterprises in September may have a certain impact on production. We expect that the possibility of a significant increase in production in September is relatively low.
In terms of inventory, according to data from relevant institutions, the total inventory of traders and enterprises in the week of September 8th was 25500 tons, a month on month increase, but still lower than the 28000 tons in the same period last year. Short term inventory has increased, and market pressure has increased compared to the previous period.
Stable and Increasing Consumption
The actual consumption of butadiene rubber in August was 114000 tons, an increase of 10.6% month on month and 11.7% compared to the same period last year; The cumulative consumption in the first 8 months was 833000 tons, higher than the 770000 tons in the same period last year. Since March, the consumption of cis-1,4-polybutadiene rubber has continued to increase, with marginal improvement in consumption status.
On September 7th, the full steel tire operating rate for the week was 64.77%, while the half steel tire operating rate was 72.2%. The operating rate increased month on month, with 54.01% and 61.94% respectively for the same period last year. The tire operating rate was at a medium high level, providing some support for demand.
From the perspective of terminal consumption, in early September, seven departments including the Ministry of Industry and Information Technology issued the "Work Plan for Stable Growth in the Automotive Industry (2023-2024)", which mentioned that relevant departments will support the expansion of new energy vehicle consumption and require that fuel vehicles shall not be subject to new purchase restrictions. The plan points out that in 2023, we will strive to achieve car sales of around 27 million units, a year-on-year increase of about 3%. With the support of policies, the market is looking forward to the peak season of "nine gold and ten silver", and we expect the production and sales data of automobiles to increase steadily in the later stage.
Strong cost support
Recently, crude oil has continued to rise, with the price of US crude oil reaching around 87 US dollars per barrel. Since July, the maximum increase has exceeded 20%, corresponding to an increase in the price of butadiene raw materials. In early July, it was 6700 yuan/ton, and in September, it reached a maximum of 8700 yuan/ton. At the same time, the quotation for BR9000 in the East China region has been raised from 10600 yuan/ton to 13750 yuan/ton. Recently, the price of butadiene has dropped to 8500 yuan/ton, and the quotation for BR9000 is at 13550 yuan/ton. From the spot situation of raw materials to finished products, the overall price is relatively strong. Currently, the pricing power of synthetic rubber is mainly in large crude oil enterprises, and the increase in crude oil will provide significant support on the cost side.
The fundamentals are characterized by a strong supply and demand pattern, with strong cost support. The overall fundamentals of synthetic rubber are relatively strong. However, it should be noted that the 2401 contract has recently seen a significant and rapid increase, coupled with a short-term inventory rebound. We believe that the fundamentals are already positive on the market, and in the absence of other positive factors, it may not be advisable to look higher in the short term. Risk points: significant increase in crude oil, other sudden factors affecting production and demand.
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