SIS Prices Continued Soaring in October Boosted by Multiple Positive Factors

The styrene-isoprene-styrene (SIS) ex-works price was uplifted for several times following the decline. Why does the SIS market begin to gain ground? How will the SIS market perform in the coming days with the dry SBS price sliding?

The SIS price saw successive increases in the past two months after it hit a new low. The SIS ex-works price of mainstream grades was uplifted for several times, up by RMB 2,800/mt totally. This round of uptrend was influenced by many factors.

1. The profit of SIS producers saw sharp declines in line with its rapid falls of price in earlier days. Thus, some SIS units at private producers were shut down or switched to produce other products. The operating rate of SIS industry hit an annual low in September. Only units at Sinopec Baling Company and Guangdong Zhonghe Chemical & Plastic maintained normal production. During this period, units at Jusage Technology and Ningbo Jinhai Chenguang Chemical were shut down for maintenance, resulting in sharp decrease of China’s SIS supply. The earlier social stocks were consumed to a largest extent, in light of almost two-month low operating rates.

2. The isoprene price stayed at a high level recently. The isoprene ex-works price averaged at RMB 9,022/mt, up by RMB 2,587/mt or 40% Y-O-Y and up RMB 1,609/mt M-O-M. That provided strong cost support to the SIS market.

3. The operating rate of hot-melt pressure-sensitive adhesive industry ramped up gradually from October. Moreover, with the shopping festivals drawing near, the express industry will have a great demand for hot-melt pressure-sensitive adhesive around November 11 and December 12. In addition, the supply of SIS mainstream grades was insufficient in October.

SCI holds that China’s SIS market has been in a stage when newly-added capacity is digested in succession due to the SIS oversupply in earlier days. However, with the demand for SIS growing from downstream users, especially in disposable sanitary products and waterproof products, China’s SIS market has gained ground constantly. China’s SIS output was 91kt in 2016, hitting a new high. In the near future, the SIS market will further boost with more use in disposable maternal & infant products and waterproof products.

The operating rate of SIS industry will ramp up successively after this rebound. The social stocks are at lows for the time being. The price of its main feedstock isoprene will lend some cost support to the SIS market. Thus, SCI estimates that SIS prices will see small-ranged movements at a high level.