SunSirs: Recent China BR Market Sees Rapid Initial Rise Followed by High-Level Fluctuation

Since the beginning of September, the market for butadiene rubber (BR) initially surged before fluctuating at a high level mid-month. SunSirs data shows that as of September 20, the price in East China stood at 15,700 RMB/ton—a 3.43% increase from the 15,180 RMB/ton recorded at the start of the month—with a period high of 16,210 RMB/ton. While cost and supply factors provided strong support for BR prices, weak downstream demand somewhat capped the extent of the gains.

Butadiene prices rose and then fell in September; early-month increases were driven by cracker unit maintenance and rising crude oil prices, while mid-month price corrections followed the gradual restart of maintenance units and an accumulation of port inventories. Data indicates that mid-September port inventories in East China reached 23,700 tons, an increase of 4,700 tons month-on-month. According to SunSirs' commodity market analysis system, the price of butadiene was 13,833 RMB/ton as of September 20—up 3.75% from the start of the month (13,333 RMB/ton) but down 6.74% from the period high of 14,833 RMB/ton.

Regarding supply, maintenance shutdowns at facilities such as Qilu and TSRC, combined with reduced operating rates at private plants facing losses, caused the domestic operating rate for high-cis BR to drop to 59%, leading to a decline in weekly output. Social inventories continued to deplete, with low stock levels providing a floor for rubber prices.

Downstream tire production rates declined, offering insufficient support for BR. As of September 11, the operating rate for domestic semi-steel tires was 65.53%, while the rate for all-steel tires was 63.53%. Inventory turnover days stood at 44.7 days for semi-steel tires and 36.4 days for all-steel tires, reflecting weak demand for commercial and passenger vehicles. Although tire manufacturers issued widespread price hike notices (ranging from 2% to 5%), high raw material costs squeezed profit margins; factories limited purchasing to immediate needs and showed little willingness to actively restock, resulting in a "peak season" performance that fell short of expectations.

In summary, BR prices are expected to maintain wide fluctuations at a high level in the short term. Low inventory levels and ongoing unit maintenance continue to provide a price floor; however, expectations of butadiene unit restarts are weakening cost support, while downstream resistance to high prices limits upward potential. Prices could rebound if maintenance continues or if geopolitical factors disrupt the crude oil market.