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Rising production costs of enterprises in the second quarter support the butadiene styrene rubber market
2024/7/10
In the second quarter, the price of butadiene styrene rubber in China broke through an upward trend, mainly due to the phased increase in costs and the driving force of related product prices breaking through the upward trend. It is expected that there will be a narrow pullback in the price of styrene butadiene rubber in the third quarter, with an estimated price range of 14000-15300 yuan/ton, mainly driven by strong costs and slightly weakened.
In the second quarter, the price of butadiene styrene rubber in China broke through an upward trend. Taking the North China market 1502 as an example, the highest price in the second quarter appeared on June 13, with a closing price of 15450 yuan/ton, setting a new high since 2018. The lowest price in the quarter appeared on April 23, with a closing price of 13150 yuan/ton, which was 1250 yuan/ton higher than the lowest price in 2024 and 2550 yuan/ton higher than the lowest price in 2023. From the fluctuation characteristics of butadiene styrene rubber prices since 2018, in the second quarter, the price of butadiene styrene rubber has gradually tended to be higher than the highest level in 7 years, from being lower than the highest level in history.
The main reason for the price increase of styrene butadiene rubber in the second quarter is that, firstly, the supply of raw material butadiene resources is less than the basic situation of demand, which continues to ferment, resulting in a higher than expected increase in butadiene prices. Secondly, the price of natural rubber futures has risen, and the atmosphere of synthetic rubber futures has been transmitted. The price has broken through the upward trend, and the price of synthetic rubber futures has risen to 16555 yuan/ton at one point. The spot price of butadiene styrene rubber market has also risen in tandem.
In the second quarter, the market price of styrene butadiene rubber broke through a new high in 2018, with related synthetic rubber futures rising and combined with rising costs. However, weak demand in downstream industries such as tires has constrained the price of styrene butadiene rubber.
Rising production costs of butadiene styrene rubber enterprises in the second quarter support the butadiene styrene rubber market
The increase in butadiene prices in the second quarter has provided support for the price of styrene butadiene rubber. At the same time, it led to a loss expansion of 251 yuan/ton to -467 yuan/ton in the average theoretical gross profit level of butadiene styrene rubber in the second quarter. The main reason for the increase in cost is that due to continuous losses in the cracking unit, the overall operating load of domestic and foreign butadiene cracking units has decreased; There is a situation of unplanned shutdown in some domestic butadiene units. The domestic butadiene production has significantly declined compared to 2023, and tight supply has driven the butadiene market price to a new high in nearly three years at the end of the second quarter, providing support for the price of butadiene styrene rubber.
The price reversal of butadiene styrene adhesive in the second quarter suppressed the price increase of butadiene styrene rubber
SBR and natural rubber can generate a certain amount of substitution in downstream applications such as tires, pipes, and products. From the market share of natural rubber and SBR, the demand for substitution has a significant impact on SBR.
In the second quarter, natural rubber prices rebounded after an upward trend, with STR20 # mixed water butadiene styrene rubber 1502 reaching a maximum of 1050 yuan/ton. The main reason for the increase in natural rubber prices is that the overall cutting rhythm of domestic and foreign production areas is affected by weather factors, resulting in slow new rubber production and reduced import volume. The overall supply of natural rubber in the domestic spot market is relatively tight, and the natural rubber inventory in Qingdao Free Trade Zone has dropped to a relatively low position; The supply side drives the spot price center of natural rubber to rise, and the price presents a situation of rising water butadiene styrene rubber prices. Alternative demand is favorable for the price of butadiene styrene rubber. In late June, the supply of natural rubber gradually returned to normal, and spot market prices gradually fell. However, the price of butadiene styrene rubber benefited from the strong driving force of raw material butadiene prices, and its spot price rose more than expected. The spot price of butadiene styrene rubber reversed to a premium of STR20 #, with the highest mixed price reaching 975 yuan/ton. Alternative demand negatively affected the price of butadiene styrene rubber, thereby suppressing the increase in butadiene rubber prices. From the perspective of alternative demand, starting from late May, the price increase of natural rubber has accelerated, and the widening price difference of premium butadiene styrene rubber has provided strong support for the price of butadiene styrene rubber; Driven by cost, the price of butadiene styrene rubber has risen faster than expected, resulting in natural rubber prices gradually falling below the price of butadiene styrene rubber. Starting from mid June, the current situation of the premium turning into a discount has suppressed the upward trend of butadiene styrene rubber prices.
The price of styrene butadiene rubber in the third quarter is expected to decline, and the average price center may be higher than that in the second quarter
According to the monitored data on price fluctuations since 2012, the probability of an increase in the price of butadiene styrene rubber in the third quarter is higher than the probability of a decrease. Generally, the demand for butadiene styrene rubber in the third quarter relies on the support of "nine gold and ten silver", and the maintenance of raw material butadiene plants in the third quarter is relatively concentrated, supported by cost and demand. The price trend of butadiene styrene rubber in the third quarter has shown an upward trend in most years.
It is expected that the price of butadiene styrene rubber in the third quarter of 2024 will basically follow the historical probability of price fluctuations for 14 years. The overall price trend is strong, but there is a narrow expectation of a pullback. The main reason is that the support of raw material butadiene for butadiene styrene rubber prices has weakened. However, considering the overall decline of raw material butadiene prices may be limited, the expected pullback in butadiene styrene rubber prices is also limited. The expected price range of butadiene styrene rubber is 14000-15300 yuan/ton, and the price trend is gradually approaching from the highest level since 2018. It is difficult to form an effective directional driving force for the price of butadiene styrene rubber in the third quarter based on the estimated supply and demand.
Cost analysis: It is expected that the market price of butadiene will decline from a high level in the third quarter, but the decline is limited. The price range may fluctuate between 13000-14000 yuan/ton, and the high market price may occur in July. In August, some European and American sources of goods gradually supplemented the Asian market, and there were also discussions on some sources of butadiene in Southeast Asia, which provided some supply for butadiene in Northeast Asia. After the restart of some shutdown facilities in China, the supply recovery may weaken the support for butadiene prices. It is estimated that the high or narrow decline in butadiene prices in the third quarter will occur. However, in the process of decline, there are still some new facilities planned to be put into operation downstream of butadiene in China, and the theoretical consumption increment may still be greater than the supply increment of butadiene. The demand side may still have some support for prices, which may lead to a rebound in butadiene prices. Cost estimates have weakened the price support for styrene butadiene rubber in the third quarter.
Supply side: It is expected that the production of butadiene styrene rubber in the third quarter will decrease by 7% compared to the second quarter, mainly due to the plan of 60 days of maintenance for the butadiene styrene rubber unit of Jilin Petrochemical in the third quarter. Li Changrong (Huizhou) will shut down for maintenance for 7 days at the end of July. In addition, the operating load of some butadiene styrene rubber units that purchase butadiene raw materials is relatively low, and the estimated loss of shutdown maintenance in the third quarter is around 10800 tons. In addition, the production of butadiene styrene rubber units of Shenhua Chemical, Zhejiang Weitai, and Hangzhou Yibang have all experienced different declines compared to normal production, which is expected to affect the increase of butadiene styrene rubber production in the third quarter by about 8000 tons compared to the second quarter. Although the production of butadiene styrene rubber shrank in the third quarter and the expected spot circulation in the butadiene styrene rubber market is not loose, the estimated supply of market goods is relatively stable.
In the second quarter, the price of butadiene styrene rubber in China broke through an upward trend. Taking the North China market 1502 as an example, the highest price in the second quarter appeared on June 13, with a closing price of 15450 yuan/ton, setting a new high since 2018. The lowest price in the quarter appeared on April 23, with a closing price of 13150 yuan/ton, which was 1250 yuan/ton higher than the lowest price in 2024 and 2550 yuan/ton higher than the lowest price in 2023. From the fluctuation characteristics of butadiene styrene rubber prices since 2018, in the second quarter, the price of butadiene styrene rubber has gradually tended to be higher than the highest level in 7 years, from being lower than the highest level in history.
The main reason for the price increase of styrene butadiene rubber in the second quarter is that, firstly, the supply of raw material butadiene resources is less than the basic situation of demand, which continues to ferment, resulting in a higher than expected increase in butadiene prices. Secondly, the price of natural rubber futures has risen, and the atmosphere of synthetic rubber futures has been transmitted. The price has broken through the upward trend, and the price of synthetic rubber futures has risen to 16555 yuan/ton at one point. The spot price of butadiene styrene rubber market has also risen in tandem.
In the second quarter, the market price of styrene butadiene rubber broke through a new high in 2018, with related synthetic rubber futures rising and combined with rising costs. However, weak demand in downstream industries such as tires has constrained the price of styrene butadiene rubber.
Rising production costs of butadiene styrene rubber enterprises in the second quarter support the butadiene styrene rubber market
The increase in butadiene prices in the second quarter has provided support for the price of styrene butadiene rubber. At the same time, it led to a loss expansion of 251 yuan/ton to -467 yuan/ton in the average theoretical gross profit level of butadiene styrene rubber in the second quarter. The main reason for the increase in cost is that due to continuous losses in the cracking unit, the overall operating load of domestic and foreign butadiene cracking units has decreased; There is a situation of unplanned shutdown in some domestic butadiene units. The domestic butadiene production has significantly declined compared to 2023, and tight supply has driven the butadiene market price to a new high in nearly three years at the end of the second quarter, providing support for the price of butadiene styrene rubber.
The price reversal of butadiene styrene adhesive in the second quarter suppressed the price increase of butadiene styrene rubber
SBR and natural rubber can generate a certain amount of substitution in downstream applications such as tires, pipes, and products. From the market share of natural rubber and SBR, the demand for substitution has a significant impact on SBR.
In the second quarter, natural rubber prices rebounded after an upward trend, with STR20 # mixed water butadiene styrene rubber 1502 reaching a maximum of 1050 yuan/ton. The main reason for the increase in natural rubber prices is that the overall cutting rhythm of domestic and foreign production areas is affected by weather factors, resulting in slow new rubber production and reduced import volume. The overall supply of natural rubber in the domestic spot market is relatively tight, and the natural rubber inventory in Qingdao Free Trade Zone has dropped to a relatively low position; The supply side drives the spot price center of natural rubber to rise, and the price presents a situation of rising water butadiene styrene rubber prices. Alternative demand is favorable for the price of butadiene styrene rubber. In late June, the supply of natural rubber gradually returned to normal, and spot market prices gradually fell. However, the price of butadiene styrene rubber benefited from the strong driving force of raw material butadiene prices, and its spot price rose more than expected. The spot price of butadiene styrene rubber reversed to a premium of STR20 #, with the highest mixed price reaching 975 yuan/ton. Alternative demand negatively affected the price of butadiene styrene rubber, thereby suppressing the increase in butadiene rubber prices. From the perspective of alternative demand, starting from late May, the price increase of natural rubber has accelerated, and the widening price difference of premium butadiene styrene rubber has provided strong support for the price of butadiene styrene rubber; Driven by cost, the price of butadiene styrene rubber has risen faster than expected, resulting in natural rubber prices gradually falling below the price of butadiene styrene rubber. Starting from mid June, the current situation of the premium turning into a discount has suppressed the upward trend of butadiene styrene rubber prices.
The price of styrene butadiene rubber in the third quarter is expected to decline, and the average price center may be higher than that in the second quarter
According to the monitored data on price fluctuations since 2012, the probability of an increase in the price of butadiene styrene rubber in the third quarter is higher than the probability of a decrease. Generally, the demand for butadiene styrene rubber in the third quarter relies on the support of "nine gold and ten silver", and the maintenance of raw material butadiene plants in the third quarter is relatively concentrated, supported by cost and demand. The price trend of butadiene styrene rubber in the third quarter has shown an upward trend in most years.
It is expected that the price of butadiene styrene rubber in the third quarter of 2024 will basically follow the historical probability of price fluctuations for 14 years. The overall price trend is strong, but there is a narrow expectation of a pullback. The main reason is that the support of raw material butadiene for butadiene styrene rubber prices has weakened. However, considering the overall decline of raw material butadiene prices may be limited, the expected pullback in butadiene styrene rubber prices is also limited. The expected price range of butadiene styrene rubber is 14000-15300 yuan/ton, and the price trend is gradually approaching from the highest level since 2018. It is difficult to form an effective directional driving force for the price of butadiene styrene rubber in the third quarter based on the estimated supply and demand.
Cost analysis: It is expected that the market price of butadiene will decline from a high level in the third quarter, but the decline is limited. The price range may fluctuate between 13000-14000 yuan/ton, and the high market price may occur in July. In August, some European and American sources of goods gradually supplemented the Asian market, and there were also discussions on some sources of butadiene in Southeast Asia, which provided some supply for butadiene in Northeast Asia. After the restart of some shutdown facilities in China, the supply recovery may weaken the support for butadiene prices. It is estimated that the high or narrow decline in butadiene prices in the third quarter will occur. However, in the process of decline, there are still some new facilities planned to be put into operation downstream of butadiene in China, and the theoretical consumption increment may still be greater than the supply increment of butadiene. The demand side may still have some support for prices, which may lead to a rebound in butadiene prices. Cost estimates have weakened the price support for styrene butadiene rubber in the third quarter.
Supply side: It is expected that the production of butadiene styrene rubber in the third quarter will decrease by 7% compared to the second quarter, mainly due to the plan of 60 days of maintenance for the butadiene styrene rubber unit of Jilin Petrochemical in the third quarter. Li Changrong (Huizhou) will shut down for maintenance for 7 days at the end of July. In addition, the operating load of some butadiene styrene rubber units that purchase butadiene raw materials is relatively low, and the estimated loss of shutdown maintenance in the third quarter is around 10800 tons. In addition, the production of butadiene styrene rubber units of Shenhua Chemical, Zhejiang Weitai, and Hangzhou Yibang have all experienced different declines compared to normal production, which is expected to affect the increase of butadiene styrene rubber production in the third quarter by about 8000 tons compared to the second quarter. Although the production of butadiene styrene rubber shrank in the third quarter and the expected spot circulation in the butadiene styrene rubber market is not loose, the estimated supply of market goods is relatively stable.
From the demand side, it is expected that there will be a pullback in the operating load of the semi steel tire market in the third quarter, but there is not much room for a pullback. The rising sea freight prices and tight container supply are expected to slow down the export orders of semi-steel tires, and the increase in finished inventory of semi-steel tires may cause adjustments to the operating load. For all steel tires, the expected operating load in the third quarter may be inferior to that in the second quarter, mainly based on passive accumulation pressure. All steel tire factories may adjust the total supply pressure through operating adjustments. Based on the overall production schedule of tires in the third quarter, combined with the high cost pressure of raw material prices, it is expected that downstream consumption of butadiene styrene rubber may still show a weakening trend in the third quarter, and the pace of negotiations in the butadiene styrene rubber market is unlikely to improve significantly. The comprehensive estimation of supply and demand is difficult to form an effective driving force for the price trend of butadiene styrene rubber in the third quarter. Therefore, it is estimated that the supply and demand are mainly driven by factors that tend to be neutral in price fluctuations of butadiene styrene rubber.
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