SunSirs: Synthetic Rubber Market Faces Pressure from Both Supply and Demand Sides
The China Synthetic Rubber Industry Association (hereinafter referred to as the Synthetic Rubber Association) reported that rising prices of butadiene, a raw material for synthetic rubber, have driven up synthetic rubber prices. Meanwhile, production cuts and reduced operating rates on the supply side, coupled with weak demand, have placed pressure on the synthetic rubber market from both supply and demand sides.
The rise in synthetic rubber prices is primarily driven by the upward trend in butadiene prices. Driven by fluctuations in international oil prices, butadiene prices have risen significantly, directly pushing up the production costs of synthetic rubber. In particular, the profit margins for butadiene-polybutadiene rubber (BR) and styrene-butadiene styrene (SBS) products are facing pressure from negative margins, forcing manufacturers to reduce production and operating rates. As of March 19, the capacity utilization rate for BR had dropped to 65.58%, SBS to 36.13%, and styrene-butadiene rubber (SBR) to 74.37%.
As production cuts and reduced capacity are implemented across the supply chain, the synthetic rubber market may face structural supply tightness. In particular, production cuts at some overseas facilities and shifts in resource flows have led to reduced liquidity of domestic synthetic rubber resources, triggering a phase of inventory drawdown.
However, the transmission of rising synthetic rubber prices to the downstream end-users has been hindered, leaving the industry facing a supply-demand mismatch. Synthetic rubber prices have surged rapidly, with certain varieties—particularly butadiene rubber—reaching over 17,000 yuan per ton at one point, marking an increase of more than 25%; However, during the process of passing these increases downstream—particularly in the tire and rubber products sectors, which are grappling with high costs and order pressures—price hikes have not been smoothly transmitted. Consequently, the entire industry chain faces the dual pressures of rising costs and subdued demand.
In response to this situation, Li Jinshan, Secretary-General of the Synthetic Rubber Association, urged the industry to continue focusing on the demand side, exploring more application scenarios for synthetic rubber to meet market needs.
Tire products represent the primary consumption sector for synthetic rubber. Currently, as the share of new energy vehicle production and sales continues to rise, new requirements are emerging for rubber performance. There has been a significant increase in consumption of synthetic rubber products such as solution-polymerized styrene-butadiene rubber (SBR) and rare-earth-modified butadiene rubber (BR), which offer resistance to wet skidding and low rolling resistance. Demand for synthetic rubber products in niche segments such as wear-resistant tires and quiet tires is also expanding.
Developing more high-end application scenarios will help enhance the synthetic rubber industry’s ability to mitigate market risks. Demand for synthetic rubber products in the new energy and energy storage sectors is growing daily. Hydrogenated nitrile rubber can be used in products such as conductive slurry dispersants for batteries, while ethylene-propylene rubber ensures the long-term stable operation of sealing systems in photovoltaic products outdoors. In the high-end manufacturing sector, demand for liquid rubber products has also surged significantly due to initiatives such as 5G base station construction.
Regarding the future trajectory of the synthetic rubber market, in the short to medium term, the market is expected to remain volatile. On the cost side, influenced by changes in the international market, raw material prices are prone to rise but unlikely to fall, making it difficult for synthetic rubber plant utilization rates to rebound significantly. However, during the 15th Five-Year Plan period, the ongoing optimization of the industrial structure will drive the gradual expansion of synthetic rubber applications in sectors such as new energy and smart manufacturing. As both supply and demand evolve toward higher standards, the industry will transition toward high-end, green, and customized production, with high-end synthetic rubber products becoming the new engine of industry growth.