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Last week, synthetic rubber and its derivatives, such as styrene butadiene rubber and butadiene rubber, saw significant gains, with weekly increases of over 6%, making them the top performers in the chemicals sector. Industry analysts believe that the synthetic rubber market is poised for further growth, driven by supportive government policies and strong downstream demand. The recent price rebound can be attributed to several key factors:
First, government support plays a crucial role. Authorities have been actively involved in managing natural rubber reserves, with state farms in Hainan and Yunnan Agricultural Reclamation already collecting and storing 150,000 to 200,000 tons of natural rubber. By year-end, an additional 60,000 tons are expected to be stored at a price of 24,600 yuan per ton, primarily sourced from the spot market. The rest will be added next year. This initiative has helped stabilize and push up natural rubber prices, which in turn has boosted the synthetic rubber sector.
Second, rising butadiene prices have provided cost support, benefiting the synthetic rubber industry. Butadiene prices have dropped significantly from a high of 21.7 yuan per ton to around 12,000 yuan per ton, a decline of nearly 50%. Now nearing cost levels, producers are showing strong determination to maintain pricing stability. Recent reports indicate that Beijing Dongfang's 30,000-ton/year butadiene plant was shut down for maintenance on September 11, with no clear restart date yet. Qixiang Tengda’s 100,000-ton/year facility is currently undergoing maintenance and operating at about 70% capacity. Meanwhile, Fushun Petrochemical’s 30,000-ton/year plant remains offline.
Third, strong demand is expected to drive the market forward. On one hand, supply constraints persist due to production issues at major players like Sinopec, leading to tight market conditions for styrene-butadiene rubber. On the other hand, as the automotive industry enters its traditional peak season, demand for tires is anticipated to rise. According to the China Association of Automobile Manufacturers, November saw a total of 79.10 million vehicles sold, marking an 11.52% increase from the previous month and an 8.16% year-on-year rise. Passenger car sales grew faster than commercial vehicles, with projections indicating annual output could exceed 19 million units. These trends suggest a positive outlook for the synthetic rubber market moving forward.