SunSirs: China BR Market Declined in December, 2020

In December, China BR declined. According to the monitoring of SunSirs, the price of BR was 11,410 RMB/ ton at the beginning of December, and dropped to 10,640 RMB/ ton at the end of the month, with an overall decrease of 6.75% at the end of the month compared with the beginning of December. On December 31, BR commodity index was 31.97, which was 68.78% lower than the highest point of 102.40 in the cycle (2011-09-25), and 41.90% higher than the lowest point of 22.53 on June 4, 2020. (Note: period refers to the period from September 1, 2011 to now)

In December, the demand for BR was insufficient and the price fell. Since December, local environmental protection and power rationing requirements have become stricter, and the overall operating rate of the downstream of BR has declined. According to SunSirs, the operating rate of half steel tire manufacturers was 50-60% and that of all steel tire manufacturers was 60% at the end of December, showing a significant decrease compared with November. Demand side drag on BR.

The overall supply side decreased slightly, forming a support for BR. According to SunSirs, at the beginning of December, the Shunding units in Yanshan started to operate at a reduced rate, and the Wanda Shunding units stopped; the Shunding units in Qilu, Maoming, Jinzhou, Daqing, Dushanzi, Sichuan and Lande started to operate normally, and the overall operation rate of Shunding decreased in December.

The price of BR raw materials dropped sharply, and the cost of BR was a drag. According to the monitoring of SunSirs, the price of butadiene at the beginning of the month was 9,926 RMB/ ton, and at the end of the month was 7,751 RMB/ ton, with an overall decrease of 21.91%.

SunSirs analysts believe that although the current prices of raw materials fell sharply, the demand side weakened, the overall formation of BR was bad. It is expected that China BR market will still be weak in the future.

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