SunSirs: China BR Market was Weak and Declined in November

In November, the market for BR was weak and declined. According to the Commodity Market Analysis System of SunSirs, as of November 30th, the market price of BR in East China was 12,370 RMB/ton, a decrease of 3.81% from the beginning of the month at 12,860 RMB/ton.

The price of raw material butadiene was strong in the early stage and significantly decreased at the end of the month, while the cost support for BR was weak at the end of the month. Downstream tire factories have started to increase production, and demand for BR has strengthened compared to October; Part of the BR units undergo alternating maintenance, and the supply of BR in November is slightly tight compared to the previous period. The factory price of BR enterprises has been lowered in the early stage and increased at the end of the month. As of November 30th, the price of Daqing Shunding Northeast Warehouse of PetroChina Northeast Sales Company has been raised by 12,200 RMB/ton.

In November, the overall production of BR slightly decreased, and the supply of BR slightly tightened compared to the previous period.

In November, the price of butadiene remained strong in the early stage and dropped significantly at the end of the month, while the cost of BR supported a weakening at the end of the month. According to the Commodity Market Analysis System of SunSirs, as of November 30th, the price of butadiene was 9,125 RMB/ton, a decrease of 4.11% from 9,516 RMB/ton at the beginning of the month. The short-term supply side has seen a significant boost, coupled with a strong increase in supplier prices, making it difficult for the butadiene market to have low-priced supply sources to supplement.

In October, the natural rubber market first rose and then fell, providing slightly stronger support for BR in the early stage. According to the Commodity Market Analysis System of SunSirs, as of November 30th, the price was 12,850 RMB/ton, a decrease of 0.08% from the beginning of the month's 12,860 RMB/ton, and the highest point in the cycle was 13,160 RMB/ton.

Demand side: Tire production in November slightly increased compared to October, providing some essential support for rubber. However, as tires enter the off-season at the end of the year, tire factory production expectations are expected to decrease, and support for rubber may weaken in the future. It is understood that as of late November 2023, the operating load of all steel tires in rubber tire enterprises in Shandong region was 64%; The operating load of semi steel tires in domestic rubber tire enterprises is 78%.

Analysts from SunSirs believe that a significant decrease in raw material prices will weaken the cost of BR. The current downstream production will provide strong support for rubber demand in the later stage, and the low supply of BR will also support it. It is expected that the spot market of BR will consolidate and operate in the short term.

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