SunSirs: Tight Supply and Weak Demand, High Consolidation of China BR Market

Recently (12.29-1.5), the market for BR has stabilized at a high level. According to the Commodity Market Analysis System of SunSirs, as of January 5th, the market price of BR in East China was 12,360 RMB/ton, a decrease of 0.56% from last Friday's 12,430 RMB/ton, and the highest point in the cycle was 12,470 RMB/ton.

The price of raw material butadiene continues to rise, the cost center of BR continues to rise, downstream tire factories are operating lower, and demand for BR is weak in support; Multiple devices have been shut down and reduced in load. Recently, the supply of BR has been tight, which has resulted in stronger support for BR. As of January 5th, PetroChina Northeast Sales Company's Daqing Shunding Northeast Warehouse has raised prices by 1,500 RMB/ton, while the mainstream prices in the Shunding rubber market in eastern China, such as Daqing, Sichuan, Yangtze, Yanshan, and Qilu, are reported at 12,200-12,700 RMB/ton; Private BR costs 11,900-12,100 RMB/ton.

Recently (12.29-1.5), the price of butadiene continued to rise, and the cost center of BR continued to rise. According to the Commodity Market Analysis System of SunSirs, as of January 5th, the price of butadiene was 8,750 RMB/ton, an increase of 2.04% from last Friday's 8,575 RMB/ton.

Recently (12.29-1.5), the natural rubber market rose first and then fell, and the atmosphere in the rubber market slightly declined. According to the Commodity Market Analysis System of SunSirs, as of January 5th, the price was 12,930 RMB/ton, a decrease of 1.00% from last Friday's 13,060 RMB/ton, and the highest point in the cycle was 13,180 RMB/ton.

Demand side: Due to the increase in equipment maintenance by tire companies during holidays, overall tire production has declined, resulting in a weakening demand for rubber. It is understood that as of early January 2023, the operating load of all steel tires in rubber tire enterprises in Shandong region was around 460%; The operating load of semi steel tires in domestic rubber tire enterprises is around 70%.

SunSirs analysts believe that raw material prices will continue to rise, and the cost of BR will continue to rise. Recently, due to the shutdown of BR plants such as Maoming Petrochemical and Qilu, the supply of BR is relatively tight, but the demand will weaken in the off-season. Overall, in the short term, the spot market for BR is relatively strong, but with the restart of maintenance facilities, prices may slightly fall.

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