SunSirs: China SBR Market Is Expected to Decline Weakly in 2025, and the Outlook for 2026 Is Still not Optimistic

In 2025, domestic styrene butadiene rubber will experience a gradual decline throughout the year, with prices dropping from approximately 14,900 RMB/ton at the beginning of the year to 11,575 RMB/ton at the end of the year, a cumulative decline of 22.32%.

Pre holiday stocking slightly increased to 15,466 RMB/ton in January; From February to early April, the fundamentals were weak and fell to 13,916 RMB/ton. In April, there was a sudden change in international trade policies and pessimistic expectations for the industrial chain. Prices quickly fell to 11,858 RMB/ton. From late April to mid May, there was a change in international trade policy strategy, and coupled with the shutdown and maintenance of Lanzhou Petrochemical and Hangzhou Yibang styrene butadiene units, prices rebounded slightly to 12,866 RMB/ton at a low level; From mid May to mid September, the fundamentals were weak and raw material prices fell, coupled with the shutdown and maintenance of Fushun Petrochemical. The price of SBR first fell and then rose in a small V-shaped fluctuation, with a high point of 12,866 RMB/ton and a low point of 11,750 RMB/ton; From mid September to early November, there was ample supply and weak demand, resulting in a weak decline in the price of SBR to 10,600 RMB/ton; From early November to the end of the year, the price fluctuated and rebounded to 11,575 RMB/ton.

Summary of the main influencing factors of the SBR market in 2025: Firstly, the cost side dragged down the annual trend. In 2025, the concentrated release of new butadiene production capacity and the continuous accumulation of inventory led to a downward shift in the price center, with a decline of 22.84% for the whole year, directly resulting in a reduction in the production cost of SBR. Secondly, the impact of tariff policies: The US policy of reciprocal tariffs triggered market panic, and prices quickly fell in mid to early April. Although macro factors brought a brief rebound in the later period, the impact of tariffs has become substantial. Finally, the contradiction between supply and demand intensified: domestic new production capacity was released, and the demand side was affected by the slowdown in the growth rate of the automotive industry, resulting in a significant increase in inventory pressure and weak fundamental support.

Outlook for the SBR market in 2026

The impact of macroeconomic and raw material markets on the Federal Reserve's interest rate cut cycle in 2026 may continue, which may drive the overall recovery of commodities. However, the impact cycle and magnitude of the Federal Reserve's interest rate cut on different commodities are also different. In addition, we need to be vigilant about the risk of supply chain disruptions caused by geopolitical factors in 2026

The cost of SBR is expected to remain stable in 2026, with a slight downward trend

In 2026, the support for the cost of SBR will continue, while butadiene will weaken, and the cost center of SBR will remain stable with a slight downward trend. On the one hand, as the core raw material of SBR, the price fluctuation of butadiene directly affects the profit margin of the industry. Historical data shows that for every 10% fluctuation in butadiene prices, ESBR production costs change by 8% -12%, while SSBR is more affected by the linkage of solvent prices. In the second half of 2026, the new production capacity of butadiene will be released, and it is expected that the price of butadiene will show a trend of initially high and then low throughout the year, with a slight decrease in the price center compared to 2025. The supply and demand pattern of styrene is expected to improve marginally in 2026. With a significant reduction in new production capacity and a more sensitive supply elasticity adjustment mechanism, the market is expected to gradually transition from surplus to equilibrium, and the price center of styrene will rebound, providing some support for the cost of SBR.

Stable and slightly increasing supply of SBR in 2026

In 2026, the proportion of solution polymerized SBR production capacity will continue to increase, while the proportion of emulsion polymerized SBR production capacity will continue to decrease. The proportion of solution polymerized SBR production capacity is expected to increase from about 27% in 2025 to a higher level in 2026? This is mainly due to the commissioning of new projects by enterprises such as Zhongzhe Group, Shenhua Chemical, and Yanshan Petrochemical. By 2026, the proportion of production capacity of latex SBR will decrease to 73.09%, with a prominent problem of overcapacity in the mid to low end and fierce market competition.

In 2026, the traditional demand for SBR will remain stable with weak demand, and the proportion of demand in new fields will increase

From the perspective of automobile production and sales, it is expected that China's automobile production will reach 26-27 million units by 2026, a year-on-year increase of 4-6%. From the perspective of tire production structure, it is expected that the production of all steel tires will increase by 3-4% and the production of semi steel tires will increase by 5-6% in 2026. The continuous popularization of new energy vehicles will become the core driving force, and it is expected that the penetration rate of new energy vehicles will exceed 50% by 2026, directly driving the application of high-performance solution polymerized SBR (SSBR) in tires, with an average annual growth rate expected to exceed 8%. Milk polymerized SBR has a relatively weak demand in traditional tires; The demand for automotive shock absorbers, seals, and other components will steadily increase, but the growth rate will be relatively slow due to the impact of infrastructure and real estate cycles; The demand for SBR in the medical field is expected to grow at an annual rate of 8% due to the acceleration of population aging.

Overall, it is expected that the market for SBR in 2026 will show a trend of initially high and then low, with narrow fluctuations and a slight downward shift in the price center. Among them, the price of latex SBR will fluctuate between 11,500 and 13,500 RMB/ton, with seasonal fluctuations due to factors such as peak and off peak seasons and parking maintenance.

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