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The prices of the synthetic rubber industry chain are expected to continue to fluctuate at high levels
Firstly, let's review the market price fluctuations in February 2024. In February, all products in the industry chain, except for chloroprene rubber, showed varying degrees of upward trend compared to January 2024. The main reason for this is the strong upward trend in cost prices, coupled with a downward trend in industrial chain operations. There is positive support in the supply side, which has boosted the market trend and continued to rise. From the table, it can be seen that SBS ranks first in the increase of synthetic rubber. The price of oil and rubber continues to rise, with a cumulative increase of 1200 yuan/ton. Before the Spring Festival, the raw material butadiene rose, and although SBS downstream gradually stopped production for holidays, the high cost led to an increase in the factory price of oil and rubber. After the holiday, the upward trend of butadiene continued, and the cost pressure on SBS factories remained unchanged. Prices continued to rise multiple times, and the market center followed suit. In terms of dry rubber track improvement: SBS in China continues to operate at a low level, and under high cost pressure, most suppliers are cautious in selling, resulting in tight spot circulation. After the holiday, with a significant increase in the domestic and international prices of butadiene, mainstream suppliers have raised their supply prices several times in the short term, with a cumulative increase of over a thousand. EPDM rubber continued to rise. In mid to late February, businesses gradually returned to the market, and the inquiry atmosphere on the market improved. With the support of favorable supply, businesses showed a strong willingness to support the market, and the price of EPDM rubber increased significantly. At the end of the month, the overall performance of domestic supply was tight, especially with a decrease in the arrival of goods from Saudi Arabia. The market supply was tight, and the reluctance of business owners to sell was strengthened. In addition, the price increase news released by Aramco further drove the market situation, and business owners were mostly wait-and-see waiting for an increase.
Overall, due to the strong boost from the raw material butadiene, the price of synthetic rubber has risen too quickly. However, downstream takeovers have followed relatively smoothly, and there is resistance to offers with excessively high premiums. Therefore, the rate of price increase for synthetic rubber is slower than that of the main raw material butadiene.
Secondly, in terms of supply, the utilization rate of industrial chain capacity has mainly declined. Among them, SBS has dropped significantly, while the capacity utilization rate of butadiene rubber and butadiene has increased. The SBS capacity utilization rate in February was 44.51%, month on month -6.92%, and year-on-year -14.73%. Baling Petrochemical, Maoming Petrochemical, Dushanzi Petrochemical, Gulei Petrochemical and other two barrel oil factories have all reduced their load to varying degrees. Yanshan Petrochemical shut down all month, while some private enterprises continued to shut down. The start of production in February continued to decline. In February, the maintenance capacity of China's butadiene rubber industry was 300000 tons. Specifically, Shandong Yihua, Zhejiang Petrochemical, and Zhenhua New Materials all had an annual production capacity of 100000 tons of butadiene rubber plants for shutdown maintenance. In addition, Daqing Petrochemical's butadiene rubber plants operated under reduced load, with fewer maintenance and reduction devices than in January, which led to an increase in capacity utilization in February. The utilization rate of butadiene production capacity in China is 69.46%, month on month+3.02%, and year-on-year+3.63%. During the month, one unit of Shanghai Petrochemical and two units of Qilu Petrochemical were shut down, but the Yangba unit resumed operation, boosting the month on month operation. Other products are affected by the Spring Festival holiday, and the operating load of domestic facilities has slightly decreased. In addition, some varieties in the industrial chain are affected by limited spot supply of imported goods in the domestic market, and supply support remains, which has boosted prices.
Analysis of fluctuations in the main raw material market
Once again, the domestic price of the main raw material butadiene continues to rise, and the market price increase has increased after the Spring Festival. Affected by the low start-up of cracking units and sudden shutdowns of sporadic units, the demand in the external market has improved, stimulating the rise of domestic export transaction prices and significantly driving the spot market. Although there was a pause in terminal demand during the Spring Festival holiday within the month, the supply side news was relatively strong. After the holiday, domestic supplier prices increased significantly, and downstream demand followed suit, gradually expanding the market increase. With market prices exceeding expectations and rising, some people are pursuing upward trends, leading to a strong upward trend in the market. Overall, the prices of raw materials for various products in the industrial chain have mainly increased, and production enterprises are under significant cost pressure, supporting the price increase of some varieties in the industrial chain.
Looking at the demand side: In February, the production capacity utilization rate of Chinese semi steel tire sample enterprises was 53.26%, month on month -25.04%, and year-on-year -22.57%; The production capacity utilization rate of China's all steel tire sample enterprises is 41.06%, which is 15.43 percentage points month on month and 28.29 percentage points year-on-year. After the holiday, most enterprises resumed work gradually around February 15th, with shorter downtime and a rapid increase in post holiday capacity utilization. The decline in capacity utilization during the month was smaller than the same period in previous years. After resuming work, the company has sufficient internal and external sales orders, and overall shipments are smooth. Affected by the Spring Festival holiday, the construction of other downstream industries in the industry chain has declined. The construction of the corridor renovation industry started at 9.21%, a month on month increase of -4.25%, and a year-on-year increase of 1.16%. During the Spring Festival holiday, the northern regions do not have the necessary construction conditions for comprehensive parking. The southwestern, southern, and eastern regions have been closed for vacation since February 5th, with a slight restart at the end of February as the main focus. Construction is at the bottom of the year. Overall, the demand side has shown weak performance, returning to the market after the holiday. The downstream tire industry, the main force of the industrial chain, has recovered more actively, but mainly consumes early inventory. New orders are limited, and multi-dimensional demand is maintained by small orders, with average trading performance.
Overall, due to the strong boost from the raw material butadiene, the price of synthetic rubber has risen too quickly. However, downstream takeovers have followed relatively smoothly, and there is resistance to offers with excessively high premiums. Therefore, the rate of price increase for synthetic rubber is slower than that of the main raw material butadiene.
Secondly, in terms of supply, the utilization rate of industrial chain capacity has mainly declined. Among them, SBS has dropped significantly, while the capacity utilization rate of butadiene rubber and butadiene has increased. The SBS capacity utilization rate in February was 44.51%, month on month -6.92%, and year-on-year -14.73%. Baling Petrochemical, Maoming Petrochemical, Dushanzi Petrochemical, Gulei Petrochemical and other two barrel oil factories have all reduced their load to varying degrees. Yanshan Petrochemical shut down all month, while some private enterprises continued to shut down. The start of production in February continued to decline. In February, the maintenance capacity of China's butadiene rubber industry was 300000 tons. Specifically, Shandong Yihua, Zhejiang Petrochemical, and Zhenhua New Materials all had an annual production capacity of 100000 tons of butadiene rubber plants for shutdown maintenance. In addition, Daqing Petrochemical's butadiene rubber plants operated under reduced load, with fewer maintenance and reduction devices than in January, which led to an increase in capacity utilization in February. The utilization rate of butadiene production capacity in China is 69.46%, month on month+3.02%, and year-on-year+3.63%. During the month, one unit of Shanghai Petrochemical and two units of Qilu Petrochemical were shut down, but the Yangba unit resumed operation, boosting the month on month operation. Other products are affected by the Spring Festival holiday, and the operating load of domestic facilities has slightly decreased. In addition, some varieties in the industrial chain are affected by limited spot supply of imported goods in the domestic market, and supply support remains, which has boosted prices.
Analysis of fluctuations in the main raw material market
Once again, the domestic price of the main raw material butadiene continues to rise, and the market price increase has increased after the Spring Festival. Affected by the low start-up of cracking units and sudden shutdowns of sporadic units, the demand in the external market has improved, stimulating the rise of domestic export transaction prices and significantly driving the spot market. Although there was a pause in terminal demand during the Spring Festival holiday within the month, the supply side news was relatively strong. After the holiday, domestic supplier prices increased significantly, and downstream demand followed suit, gradually expanding the market increase. With market prices exceeding expectations and rising, some people are pursuing upward trends, leading to a strong upward trend in the market. Overall, the prices of raw materials for various products in the industrial chain have mainly increased, and production enterprises are under significant cost pressure, supporting the price increase of some varieties in the industrial chain.
Looking at the demand side: In February, the production capacity utilization rate of Chinese semi steel tire sample enterprises was 53.26%, month on month -25.04%, and year-on-year -22.57%; The production capacity utilization rate of China's all steel tire sample enterprises is 41.06%, which is 15.43 percentage points month on month and 28.29 percentage points year-on-year. After the holiday, most enterprises resumed work gradually around February 15th, with shorter downtime and a rapid increase in post holiday capacity utilization. The decline in capacity utilization during the month was smaller than the same period in previous years. After resuming work, the company has sufficient internal and external sales orders, and overall shipments are smooth. Affected by the Spring Festival holiday, the construction of other downstream industries in the industry chain has declined. The construction of the corridor renovation industry started at 9.21%, a month on month increase of -4.25%, and a year-on-year increase of 1.16%. During the Spring Festival holiday, the northern regions do not have the necessary construction conditions for comprehensive parking. The southwestern, southern, and eastern regions have been closed for vacation since February 5th, with a slight restart at the end of February as the main focus. Construction is at the bottom of the year. Overall, the demand side has shown weak performance, returning to the market after the holiday. The downstream tire industry, the main force of the industrial chain, has recovered more actively, but mainly consumes early inventory. New orders are limited, and multi-dimensional demand is maintained by small orders, with average trading performance.
In summary, in February, various products in the synthetic rubber industry chain were the main players in the market, with the main downstream tire companies showing positive performance in resuming work after the year. However, their purchasing performance was average and affected by the strong operation of the raw material butadiene market. Some downstream products were under increased profit pressure due to high costs, and their purchasing mentality was also cautious. It is expected that the prices of the synthetic rubber industry chain will continue to fluctuate at high levels in March, and caution should be paid to mainstream pricing policies and downstream procurement follow-up.
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