August 18th, news:
Butadiene rubber prices have fluctuated and risen significantly. Data shows that as of August 18, the price of butadiene rubber in East China was 14,680 CNY/ton, an increase of 9.14% from 13,450 CNY/ton at the beginning of August. The cost and supply side provided strong support for butadiene rubber, while weak downstream demand to some extent suppressed the price increase of butadiene rubber.
From a cost perspective, the price of raw material butadiene has surged due to plant maintenance and tightening spot supply. As a result, profit margins for cis-1,4-polybutadiene rubber production have been squeezed, even turning into losses. The rising costs are providing strong support to the spot market, prompting major petrochemical companies to raise their ex-factory prices multiple times, thereby driving up market quotations. According to the commodity market analysis system, as of August 18, the price of butadiene stood at 11,533 CNY per ton, up 15.14% from the beginning-of-month level of 10,016 CNY per ton.
On the supply side, industry operating rates have remained in the 74%-75% range. With some plant maintenance activities underway and strong export performance, China's social inventory continues to decline and remains at a relatively low level. As a result, spot market supplies are tight, alleviating pressure from inventory accumulation.
The demand side remains in the traditional off-season. Tire companies have seen a slight rebound in operating rates, but the recovery in the end-market has been limited. Downstream buyers remain resistant to high-priced raw materials and mostly continue to adopt a just-in-time procurement approach. Large-scale restocking has yet to begin, and the demand side has not yet developed any proactive momentum for price increases. As of August 14, the operating load for semi-steel tires among Chinese tire companies stood at 64.32%, while the operating load for all-steel tires among Shandong-based tire companies was 63.01%.
Future market forecast:
The spot price of butadiene rubber and its moving averages show that the price was range-bound from late July to early August, with short-term moving averages oscillating and indicating a balance between bullish and bearish forces. In mid-August, the current price rose above all short-term moving averages, suggesting a short-term bullish bias and the potential to test previous rebound highs. However, the medium-term moving averages have not fully opened upwards, indicating significant overhead pressure and a lack of conditions for a one-sided trend. It is expected that in the short term, the price will be biased towards a strong consolidation, with a high probability of encountering resistance and then retreating after a rise. Close attention should be paid to the effectiveness of the moving average support; if the short-term moving averages are broken, the rebound pattern will be disrupted.
Overall, in the short term, cost drivers are dominant, and with the approaching peak demand season in September and October, there is an expectation of inventory buildup for tires. Butadiene rubber may maintain a relatively strong and volatile trend, with potential for further increases in spot prices, although the extent of the price increase will be limited. In the medium to long term, attention should be paid to the potential supply shock from new production capacity coming online.
