In the second half of April, the butadiene rubber market in China showed a slight decline

April 29 News

In the second half of April, as ceasefire negotiations in the Middle East progressed, international oil prices fell, and butadiene prices continued to decline, leading to the collapse of cost support for polybutadiene rubber. By April 29, the mainstream quotation for BR9000 in the East China region dropped to 16,180 CNY/ton, a decrease of 3.36% from 16,790 CNY/ton on the 15th. The futures market also weakened, with the main contract falling below 15,500 CNY/ton during the period.

In the second half of April, the expectation of butadiene supply recovery increased, port inventory accumulated, and prices continued to fall, with a weekly price decrease of over 8%. The production cost of polybutadiene rubber consequently decreased, leading to a continuous weakening of support for its price. According to the commodity market analysis system, as of April 29, the price of butadiene in China was 12,566 CNY/ton, a decrease of 22.11% from 16,133 CNY/ton on the 15th.

Due to severe losses in the early period, butadiene rubber plants in China have been operating at low capacity, with the industry's operating rate in April around 45%, significantly lower than the same period last year. Companies continue to reduce inventory, and the price decrease of butadiene rubber is limited.

Downstream tire production is basically stable, with full steel tire companies gradually undergoing maintenance and production limits, leaving limited room for an increase in the overall capacity utilization rate. This maintains the rigid demand support for polybutadiene rubber. Additionally, with the US-Iran negotiations, crude oil prices have fallen from their initial high at the start of the conflict, leading to a partial reduction in the geopolitical premium and a decrease in market risk aversion. Market sentiment has turned cautious.

Looking ahead, the price of raw material butadiene has fallen from its high, resulting in insufficient cost support; the low operating rates on the supply side are unlikely to change in the short term; and demand is supported by rigid demand, leaving little room for maneuver for polybutadiene rubber in the short term. Additionally, changes in the situation in the Middle East will continue to impact the polybutadiene rubber supply chain through crude oil. If the conflict between the US and Iran escalates after the holiday, leading to another significant increase in crude oil prices, the cost support in May will cause the polybutadiene rubber market to stop falling and rise again.