Review of the market situation of butadiene rubber in 2023

 

In 2023, the market price of butadiene rubber fluctuated and rose. According to the commodity market analysis system of Shengyishe, the price of butadiene rubber at the beginning of 2023 was 10580 yuan/ton, and the price at the end of the year was 12430 yuan/ton, with a year-on-year increase of 17.49%; The low point of the year was 10330 yuan/ton, and the high point was 13380 yuan/ton, with an amplitude of 34.37%.

 

From January to February at the beginning of the year, on the one hand, the raw material butadiene significantly increased, and the cost of butadiene rubber increased. On the other hand, after the comprehensive opening up, downstream production gradually increased, and the price of butadiene rubber increased; From March to June, with a significant decline in the price of raw material butadiene and weak demand for loose supply of butadiene rubber, the price of butadiene rubber plummeted to the lowest point of the year; Supported by four factors from July to September, including an increase in tire production, a significant increase in raw material prices, rotating maintenance of butadiene rubber equipment, and a bullish sentiment towards the listing of butadiene rubber futures funds, the price of butadiene rubber began a second round of increase, reaching a peak of 13880 yuan/ton in September; Although the price of butadiene continued to rise slightly after the National Day holiday, the price of butadiene rubber gradually declined due to negative factors such as increased pressure on the supply side of butadiene and a gradual decline in downstream tire production in the off-season; At the end of the year, due to the impact of multiple equipment maintenance for butadiene rubber, the production of butadiene rubber decreased to a low level of 5.5%. In a tight supply situation, the price of butadiene rubber rebounded.

 

In summary, there are three main factors that will affect the trend of butadiene rubber in 2023: firstly, the tire production in 2023 has increased to a certain extent compared to 2022, supporting the overall upward trend of butadiene rubber market in 2023 from the demand side; 2、 The price of raw material butadiene fluctuated widely, and the cost side boosted the rise of butadiene rubber at the beginning of the year and in the third quarter; 3、 In 2023, only Zhejiang Petrochemical’s new production capacity of 100000 tons/year of butadiene rubber was put into operation, and there was not much increase in production capacity. However, the rotating maintenance of multiple units of butadiene rubber during the year caused a tight supply side, which helped push up the price of butadiene rubber in the third quarter and at the end of the year.

 

Market forecast for butadiene rubber in 2024

 

Cost side: More new production capacity for butadiene, expected decrease in cost of butadiene rubber

 

According to Business Society, there will be a significant increase in the production capacity of raw material butadiene in 2024. Although downstream production capacity of butadiene has also increased to some extent, the overall increase is not as fast as the expansion of butadiene, and there will be more production in the second half of the year. It is expected that the supply of butadiene will face significant pressure in 2024, especially in the second half of the year when the market will operate under pressure. As of the end of November 2023, the butadiene production capacity in 2023 was 6.416 million tons; In 2024, the new production capacity of butadiene will reach 1.07 million tons, and the butadiene production capacity will reach 7.486 million tons.

Supply side: The continued increase in production capacity of butadiene rubber is expected to bring certain pressure to the 2024 market

 

After the addition of 100000 tons of new annual production capacity of butadiene rubber in 2023 (already put into operation), the new annual production capacity of butadiene rubber in 2024 is 320000 tons, and nearly half of the new production capacity will be released by the end of 2024. This will gradually increase the pressure on the supply side of butadiene rubber in 2024, especially starting from the end of 2024, the pressure will reach a new high.

 

Demand side: Domestic tire production capacity continues to expand in 2024, and demand for butadiene rubber is expected to increase slightly

 

In 2024, domestic tire production capacity will continue to expand. It is reported that in 2024, the production capacity of semi steel tires and full steel tires will increase by 25 million and 5.5 million, respectively, with a year-on-year increase of 3% and 2.5%. In addition, the expected increase in both internal and external demand for tires in 2024 will support the domestic tire industry to maintain a high operating rate, which in turn will support the market for butadiene rubber in 2024.

 

The driving force for tire demand in 2024 is divided into two paths: internal and external. On the one hand, the expected increase in domestic automobile production and sales provides support for tire demand. Affected by the expansion of domestic demand and industrial policy support, the demand for tires will continue to grow domestically. It is reported that at the 2024 China Automotive Market Development Forecast Summit held on December 11, 2023, the China Association of Automobile Manufacturers (CAAM) predicted that the sales of automobiles and new energy vehicles in 2024 would be approximately 31 million and 11.5 million respectively, with a year-on-year increase of 3% and 20%. On the other hand, the improvement of domestic tire technology and low prices have continuously enhanced the competitiveness of Chinese tires in the international market. In addition, the development of emerging markets such as Mexico and Brazil has created opportunities for Chinese tire exports. It is expected that the domestic tire export volume will continue to increase compared to the same period in 2024.

Looking ahead to 2024, due to increased pressure on the supply side of butadiene, the overall price expectation is expected to decline, and the cost of butadiene rubber in 2024 will decrease to a certain extent compared to 2023. Therefore, it is expected that the profit of the butadiene rubber industry in 2024 will actually increase compared to 2023; The downstream demand for butadiene rubber is expected to continue to grow slightly, and driven by profits, it is expected that the production of butadiene rubber will remain relatively high in 2024.

 

Overall, in 2024, the price of butadiene rubber may show a trend of high in the front and low in the back. In the first half of the year, there is not much pressure on the new production capacity of raw material butadiene, and the cost and demand aspects of butadiene rubber support the high price operation; In the second half of the year, the concentrated release of new butadiene production capacity will weaken the cost support for butadiene, and driven by profits, the supply of butadiene rubber will increase, and the price of butadiene rubber will gradually decline. It is expected that the high point of the butadiene rubber market in 2024 will occur in the first half of the year, with an expected high point around 14500 yuan/ton; The low point of the 2024 market is expected to occur in the second half of the year, with the low point expected to be around 11000 yuan/ton.

Melamine