Butadiene Rubber Market Prices Rise Sharply

March 4th, according to news,

Recently, the geopolitical situation in the Middle East has suddenly escalated, increasing the risk to shipping safety in the Strait of Hormuz and causing a significant jump in international crude oil prices. This has driven the entire energy and chemical sector to strengthen. As an important downstream synthetic rubber product of crude oil, polybutadiene rubber (BR) has risen sharply due to cost-driven factors and improved sentiment.

According to the commodity market analysis system, as of March 3, the price of butadiene rubber in the East China region was 13,670 CNY/ton, an increase of 5.07% from 13,010 CNY/ton at the beginning of the month. The main factors affecting the price were increased inventory, falling raw material prices, and insufficient downstream production after the holiday.

The sharp rise in crude oil prices has opened up room for costs to climb.

The Middle East conflict has directly impacted the global energy supply chain, causing Brent crude oil and Chinese crude oil futures to surge significantly. The price of raw materials for butadiene rubber has risen, providing a solid bottom support for butadiene rubber. According to the commodity market analysis system, as of March 3, the price of butadiene was 10,293 CNY per ton, an increase of 3.00% from 9,993 CNY per ton at the beginning of the month.

On the 3rd, the butadiene rubber futures opened significantly higher with a gap, and the spot market followed with active increases. Main suppliers such as China National Petroleum Corporation (CNPC) and Sinopec raised their ex-factory quotes. Spot prices in East China, North China, and Shandong collectively increased, with the weekly price increase noticeably expanding.

High inventory pressure, slow recovery in demand

After the holiday, China's polybutadiene rubber plants are generally operating at 80% capacity, with ample market supply. However, some plants have planned maintenance in March, leading to expectations of a marginal reduction in supply. However, social inventory has continued to accumulate to high levels after the holiday, becoming the main factor suppressing price increases and limiting the space for price hikes. Downstream tire companies are gradually resuming production, but the recovery is slow. Previous purchases were mainly based on demand, and there is little willingness to chase high prices at present, so the demand side has not yet formed a strong pull.

Overall, the recent rise in butadiene rubber is due to the dual benefits of cost and sentiment brought about by the conflict in the Middle East, rather than a fundamental reversal in the supply and demand dynamics. Before the conflict shows significant signs of easing, crude oil prices are more likely to rise than fall, and the relatively strong trend of butadiene rubber will continue. However, high inventory levels and weak domestic conditions in China will lead to a fluctuating upward trend with significantly increased volatility.