July 28 news
Middle East geopolitical risk premium has quickly dissipated, leading to a significant drop in international oil prices. Brent crude fell from above $95 per barrel to around $85, with the maximum single-day price decrease exceeding 7%. This decline has led to a general weakening of China's energy and chemical industry chain, with the spot price of synthetic rubber also falling. Data shows that as of July 28, the price of butadiene rubber in the East China region was 13,540 CNY/ton, down 3.70% from 14,060 CNY/ton on the previous Friday.
In the futures market, the main contract for butadiene rubber BR2609 plummeted by 6.22% on the 28th, closing at 12,120 CNY/ton, with a cumulative decline of nearly 900 yuan for the week; in the spot market, the factory price of butadiene rubber was reduced by 400 CNY/ton to 13,200 CNY/ton, with traders actively reducing prices to sell, leading to a synchronized decline in spot market prices.
The pressure on the supply and demand fundamentals has increased, with China's synthetic rubber plant operating at over 66%, ensuring ample market supply. The downstream tire industry is in the traditional low season with low production, and as of July 24, the operating load for semi-steel tires in Chinese tire companies was 65%, while the operating load for all-steel tires in Shandong tire companies was also 65%. The finished goods inventory for all-steel tires in Chinese tire companies is 40.3 days, and for semi-steel tires, it is 45.6 days.
Market Outlook: In the short term, market performance is highly correlated with crude oil fluctuations. If international oil prices continue to remain weak, the cost support from raw materials will weaken, and butadiene rubber prices are likely to stay on the weaker side. However, if crude oil prices stabilize and rebound, and downstream tire production picks up significantly, butadiene rubber prices will once again start to rise.
