SunSirs: China BR Market Experiences Initial Gains Followed by Declines and Wide Fluctuations

Since the beginning of October, the polybutadiene rubber market has seen an initial rise followed by a decline, characterized by wide fluctuations. According to data from SunSirs, the price of BR in East China stood at 16,350 RMB/ton as of October 22—an increase of 0.80% from the 16,220 RMB/ton recorded at the start of the month—with a peak of 16,900 RMB/ton during this period.

Geopolitical tensions have driven up crude oil prices, which in turn kept butadiene prices at a high level. However, the subsequent resumption of production at cracking units and an increase in imported supplies have led to a gradual easing of butadiene availability. Inventories at ports in East China have risen to 28,200 tons, and with demand remaining weak, butadiene prices have retreated. Data from the SunSirs commodity market analysis system shows that as of October 22, the price of butadiene was 13,266 RMB/ton, down 2.09% from 13,550 RMB/ton at the beginning of the month.

In October, several domestic polybutadiene production units underwent maintenance. Facilities operated by Qixiang and Haopu New Materials, along with certain rare-earth polybutadiene units, either halted production or reduced operating rates, keeping the industry’s overall operating rate at a relatively low level—around 60%. A slight reduction in manufacturer inventories has provided some marginal support for BR.

Following the holiday, the momentum from the "Golden September" peak season has faded. Demand for all-steel tires remains weak, and the destocking of finished tire products has been slow, putting pressure on profit margins. Consequently, enterprises are largely purchasing only what is strictly necessary, avoiding any stockpiling. Demand from non-tire sectors—such as footwear materials and rubber hoses—remains lackluster, with no significant growth, offering insufficient support for BR.

From a fundamental perspective, the BR market is expected to continue fluctuating at a high level in the short term. Ongoing maintenance at industrial facilities, combined with high international crude oil prices fueled by geopolitical conflicts, provides support for BR in terms of both supply and costs. However, as demand is unlikely to see any significant improvement, the potential for a sustained rebound remains weak. In the medium to long term, should geopolitical conflicts come to an end, the cost of BR could collapse. Compounded by factors such as a concentrated resumption of production at various facilities and potential disruptions to international trade, the market for BR may face a significant downside risk.