Is synthesis rubber market in short of goods? Market talks

Guide:  
the EX-work price of BR (butadiene rubber) in the early September has risen to a new high in 2016, up 25% year on year, which has brought topic among the most market players over its spread price to various sorts of natural rubber. So what is the engine to drive such rise since September? All those said "short of goods" is real in the market? Below is our analysis:

The import quantity of BR（butadiene rubber) decreased remarkably while on USD market BR supply is tight

According to the supervision by oilchemdata, China's total imported quantity of BR (butadiene rubber) and SBR (styrene butadiene rubber) decreased by 2.01% year on year, among which, SBR import quantity increased by 5.4% year on year, while BR import quantity decreased by 13.4%. The main reason that BR import quantity enlarge the drop from January to July 2016 is: first, butadiene's price stayed at high level. Some overseas BR rubber units was running at low utilisation rate due to high cost of butadiene; second, Gaoqiao's BR units shut down, followed by shutdown of Huayv's BR unit, while Sinopec has tight resources of BR, and Zhongyou raised its direct supply rate,so that there is rare flow of BR spot goods in market. Some market players consider to channel the import source, but USD offer to distributors seems high and good supply is tight, USD market traders are mostly wait-and-see; the third point, SBR import is relatively stable, and major SBR units overseas are running normally, with normal goods supply, but the increased import quantity can not set off the decrease of imported BR quantity. Therefore, the synthesis rubber import quantity was running at sliding trend from January to July 2016.

Producer-low profit, with low utilisation rate

Chinese SBR/BR Units Turnaround Plan August-September 2016
 ’000mt/year

According to the supervision by oilchemdata, China's total imported quantity of BR (butadiene rubber) and SBR (styrene butadiene rubber) decreased by 2.01% year on year, among which, SBR import quantity increased by 5.4% year on year, while BR import quantity decreased by 13.4%. The main reason that BR import quantity enlarge the drop from January to July 2016 is: first, butadiene's price stayed at high level. Some overseas BR rubber units was running at low utilisation rate due to high cost of butadiene; second, Gaoqiao's BR units shut down, followed by shutdown of Huayv's BR unit, while Sinopec has tight resources of BR, and Zhongyou raised its direct supply rate,so that there is rare flow of BR spot goods in market. Some market players consider to channel the import source, but USD offer to distributors seems high and good supply is tight, USD market traders are mostly wait-and-see; the third point, SBR import is relatively stable, and major SBR units overseas are running normally, with normal goods supply, but the increased import quantity can not set off the decrease of imported BR quantity. Therefore, the synthesis rubber import quantity was running at sliding trend from January to July 2016.



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