According to the data of business associations, this week (8.5-8.9) the domestic price of cis-butadiene rubber rose sharply. At the beginning of the week, the price was 10,700 yuan/ton, and at the end of the week, the price was 11,1187 yuan/ton, an overall increase of 4.56%.

Cost side: The high price of raw material butadiene supports the formation of cis-butadiene rubber

This week, domestic butadiene spot resource supply still has some support. According to the business associations, the 60,000 tons/year extraction equipment of Shandong Witt Chemical Company stopped after a short period of operation in January, and the restart time is unknown. Huayu Butadiene Extraction Plant in Shandong Province stopped about July 12. The 100,000 tons/year Oxygen Dehydrogenation Unit in Silbang, Jiangsu Province stopped for overhaul on July 29, and the estimated time lasted about 15 days. The 30,000 tons/year plant of Liaoyang Petrochemical Company stopped for overhaul on June 5 and restarted in early August. Affected by this, the domestic butadiene market once surged this week, with Sinopec’s supply price rising to 1000-10100 yuan/ton and Northeast manufacturers’price rising to 9700-9810 yuan/ton. During the week, Sinopec’s supply price increased continuously, which brought a significant boost to the market. With the joint support of downstream stages, the nodal manufacturers’export supply increased significantly at the beginning of the week, which drove the market to a high point. However, with the rapid rise in prices, it is difficult to sustain downstream support, market prices fell slightly in the latter part of the week.

From the specific price chart, the price of butadiene has been rising all the way since this year, while the price of cis-butadiene rubber has been declining continuously. In late July, the price of butadiene has risen like a rainbow, making the cost of cis-butadiene rubber go up all the way. According to the current price of butadiene, the theoretical cost of cis-butadiene rubber is around 12800 yuan/ton. Obviously, the profit is greatly upside down. Cis-butadiene rubber has great pressure on cost surface.

Supply side: cis-butadiene rubber plant maintenance has increased since the second quarter, cis-butadiene supply has further reduced

From the table above, since the second quarter, some domestic cis-butadiene rubber manufacturers have been overhauling one after another, involving a capacity of 370,000 tons, further reducing the supply side of cis-butadiene and supporting the price of cis-butadiene rubber.

Demand side: downstream demand is still slightly weak

In the first half of 2019, domestic tire production declined slightly compared with the same period last year, and the demand for cis-butadiene rubber support was slightly weaker. According to statistics, in June 2019, the domestic output of rubber tyres was 70.279 million, down 2.45% annually, up 3.2% year on year; in January-June, the domestic output of rubber tyres was 403.745 million, down 1.0% year on year.

Future Prospects

Business analysts believe that at present, on the one hand, the price of upstream raw material butadiene has risen sharply, on the other hand, the supply of cis-butadiene rubber is relatively tight, which supports the price of cis-butadiene rubber. Later, the market of cis-butadiene rubber may continue to rise tentatively.