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SunSirs: China BR Market Rose in the First Quarter of 2024
March 15 2024 10:36:26SunSirs(Selena)

The market price of BR rose in the first quarter. According to the commodity market analysis system of SunSirs, as of March 13th, the market price of BR in East China was 13,280 RMB/ton, an increase of 6.84% from 12,430 RMB/ton on January 1st.

There are three main reasons: firstly, the price of butadiene increased significantly in the first quarter, and the cost center of BR increased significantly; Secondly, downstream stocking before the holiday and downstream tire production gradually increase after the holiday, providing certain support for the demand for BR; After the end of the holiday, multiple BR plants gradually reduced their load and shut down, resulting in an overall decrease in BR production and a decrease in pressure on the supply side of BR; Driven by comprehensive factors, the factory prices of enterprises have gradually increased, and market quotations have followed suit, leading to a rise in the market price of BR. But as the price of BR rises, downstream suppliers are resisting high priced sources, and the purchasing power for BR has slowed down. The inventory of BR enterprises has increased compared to early January. Currently, many BR merchants are offering inverted prices, and the BR market is in a short-term high consolidation trend. As of March 13th, the mainstream prices of BR markets in East China, including Daqing, Sichuan, Yangtze, Yanshan, Qilu, etc., were 13,200-13,400 RMB/ton; Private BR costs 13,100-13,200 RMB/ton.

The price of butadiene increased significantly in the first quarter, and the cost pressure on BR increased significantly. As of March 31, the theoretical production profit of BR fell to around -1000 RMB/ton. According to the Commodity Market Analysis System of SunSirs, as of March 13th, the price of butadiene was 11,528 RMB/ton, an increase of 34.45% from 8,575 RMB/ton on January 1st. Since the first quarter, domestic butadiene production has remained below 70%, with relatively tight supply in the early stage. In addition, the external market of butadiene has been driven by the rebound in crude oil prices, rising from $990/ton CFR China in early January to $1360/ton CFR China on March 13, providing strong support for domestic prices. Comprehensively driving up the price of butadiene.

Zhenhua, Yihua, Zhejiang Petrochemical and other BR plants have successively shut down, and the overall production of BR in February has declined. Starting from March 1st, the Jinzhou Petrochemical plant will be shut down for maintenance, and the Shunding units of Qixiang, Yangzi, Daqing, etc. will operate at reduced load. In addition, there are still plans for maintenance of Shunding units such as Zhejiang Chuanhua and Yantai Haopu in the later stage, and the supply of Shunding rubber is expected to be mainly tight in the later stage. As of March 13th, the domestic production of BR has started at around 64%, as follows:

Demand side: Downstream tire production will continue to increase after the holiday, providing certain support for BR. It is understood that as of March 8th, the operating load of semi steel tires in domestic tire enterprises was around 79%; The operating load of all steel tires in tire enterprises in Shandong region is close to 70%; Overall, there is some support for the supply and demand of BR, but as the price of BR rises, downstream consumers may resist high prices and procurement efforts may slow down.

Market forecast: SunSirs analysts believe that the price of raw material butadiene is still at a high level, and the cost support for BR is strong; While some devices are being shut down and reduced in load, there are still other maintenance plans in the later stage, and the expectation of starting production of BR is further reduced; The cost and commencement of production support the market for BR. However, the current downstream resistance to high priced sources of BR has slowed down the purchasing power, putting pressure on the BR market. Overall, the spot market of BR is currently in a dilemma of rising and falling, with a narrow consolidation trend in the short term.


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