In 2023, the market price of BR fluctuated and rose. According to the commodity market analysis system of SunSirs, the price of BR at the beginning of 2023 was 10,580 RMB/ton, and the price at the end of the year was 12,430 RMB/ton, with a year-on-year increase of 17.49%; The low point of the year was 10,330 RMB/ton, and the high point was 13,380 RMB/ton, with an amplitude of 34.37%.

There are three main factors that affect the trend of BR in 2023: First, the tire production in 2023 has increased to a certain extent compared to 2022, supporting the overall upward trend of BR market in 2023 from the demand side; Second, the price of raw material butadiene fluctuated widely, and the cost side boosted the rise of BR at the beginning of the year and in the third quarter; Third, in 2023, only Zhejiang Petrochemical's new production capacity of 100,000 tons/year of BR was put into operation, and there was not much increase in production capacity. However, the rotating maintenance of multiple units of BR during the year caused a tight supply side, which helped push up the price of BR in the third quarter and at the end of the year.

Market forecast for BR in 2024

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

According to SunSirs, 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 BR is expected to bring certain pressure to the 2024 market

After the addition of 100,000 tons of new annual production capacity of BR in 2023 (already put into operation), the new annual production capacity of BR in 2024 is 320,000 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 BR 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 BR 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 BR 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 BR in 2024 will decrease to a certain extent compared to 2023. Therefore, it is expected that the profit of the BR industry in 2024 will actually increase compared to 2023; The downstream demand for BR is expected to continue to grow slightly, and driven by profits, it is expected that the production of BR will remain relatively high in 2024.

Overall, in 2024, the price of BR 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 BR 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 BR will increase, and the price of BR will gradually decline. It is expected that the high point of the BR market in 2024 will occur in the first half of the year, with an expected high point around 14,500 RMB/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 11,000 RMB/ton.

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