In 2024, BR first rose and then fell, and overall rose

In 2024, the significant increase in the cost of BR supported the high price of BR. The profit of BR enterprises decreased, and the overall industry production was low. In addition, the price of natural rubber increased significantly, and the demand for substitute BR increased. The overall fundamentals of the BR market in 2024 were relatively strong, with prices rising sharply in the first three quarters. In the fourth quarter, due to the impact of cost decline and increased production, the next high point fell and then the range was mainly adjusted. According to the monitoring of SunSirs, as of December 31, 2024, the market price of BR was 13,720 RMB/ton, an increase of 10.38% from 11,739 RMB/ton at the beginning of the year; The high point of the cycle was 16,810 RMB/ton in early October, and the low point of the cycle was 12,200 RMB/ton at the end of January.

In the first three quarters, unexpected incidents occurred frequently in the supply side of raw material butadiene, and prices continued to rise. In addition, the continuous losses of the BR equipment and the frequent proactive production control and parking behaviors of enterprises have led to tight supply in the BR market. In addition, in August and September, natural rubber was affected by typhoon weather, and there were concerns about tight supply in the market. Shanghai rubber prices quickly rose, and BR was driven by this, resulting in a resonance increase in current prices. After the National Day holiday at the beginning of the fourth quarter, accompanied by a cooling of macro sentiment and a high drop in the price of raw material butadiene, the profits of BR factory have recovered, and the production of BR has gradually increased, resulting in increased supply pressure. Downstream tire production has remained stable with slight fluctuations, providing strong support for the demand for BR, but resisting high priced sources. In addition, domestic natural rubber prices have stabilized at a high level, and the substitutability of BR still exists. Under the comprehensive influence, the market for BR in the fourth quarter mainly saw a range consolidation after a high-level decline.

The basic outlook for BR in 2024 is good

The tight supply in the butadiene market has led to a significant increase in prices, while the cost of BR is supported

In 2024, the start of the raw material butadiene plant was relatively low. On the one hand, the release of new production capacity was not smooth, and on the other hand, some butadiene plants in Southeast Asia were temporarily shut down, resulting in a tight supply of butadiene resources in domestic and foreign markets and a significant increase in butadiene prices. In the fourth quarter, due to the expected commissioning of a plant in Tianjin, the price of butadiene fell from a high level. According to the monitoring of SunSirs, as of December 31, 2024, the domestic price of butadiene was 10,800 RMB/ton, an increase of% from 8,575 RMB/ton at the beginning of the year, and the peak of the cycle was 13,725 RMB/ton in early July.

The overall production of BR plant in 2024 is relatively low, with no pressure on the supply side

Affected by continuous cost increases in the first three quarters of 2024, BR is facing a significant loss situation, and the overall enthusiasm of rubber factories to start production is low. The supply side is facing strong market support; In the fourth quarter, with the profit recovery brought by the decrease in costs, the early parking facilities were gradually restarted, and the supply of BR increased.

The overall stability and fluctuation of downstream tire construction in 2024 provide support for the rigid demand of BR

In 2024, the operating rate of all steel tires remained relatively low compared to the same period last year, but the inventory of all steel tires gradually decreased in the second half of the year and the operating rate steadily increased. In 2024, the operating rate of semi steel tires remained relatively high year-on-year, and downstream passenger car sales continued to improve. The inventory of semi steel tires has remained at a relatively low level. Although the production of all steel tires has a low demand for dragging rubber, the overall consumption of BR in tire production is relatively high year-on-year due to the sustained improvement in demand for semi steel tires.

Outlook for the BR Market in 2025

Except for the newly put into operation units in 2024, there are still plans to put new butadiene production capacity into operation in 2025. According to statistics, China's butadiene production capacity in 2024 is 6.697 million tons per year, an increase of 150,000 tons from 6.546 million tons in 2023. According to statistical data, China's butadiene production capacity plan is expected to increase by about 1.2 million tons in 2025. Based on this amount, China's butadiene production capacity is expected to reach 7.89 million tons per year by 2025, Therefore, the market expects that the supply of butadiene will become relatively loose in 2025, and the supply side's support for prices will weaken.

At present, Yulong's 150,000 ton Gaoshun BR plant is in the trial stage, and it is expected to release production in the first quarter of 2025, with a slight increase in BR production capacity. In addition, in 2025, except for the major overhaul plan in Maoming, most other facilities will mainly undergo minor repairs. In addition, the expected cost decline will stimulate rubber enterprises to actively schedule production. It is comprehensively expected that the supply of BR in 2025 will be more relaxed than in 2024.

On the one hand, the global resident car stock will maintain a growth trend from 2023 to 2025; On the other hand, in the past 2024, the global share of cheap tires in Asia has increased. Overall, the improvement of global residents' consumption ability and the shift in their consumption habits towards choosing more cost-effective Asian tires are expected to further open up the potential demand space for the replacement tire market, and the demand for replacement tires is expected to continue to grow by 2025. In addition, the downstream demand for automobiles is expected to improve in 2025, especially for new energy vehicles. Encouraged by relevant domestic policies, it is expected that demand will continue to steadily increase. There is a strong need for support for BR.

Under the influence of the above factors, it is expected that the price of BR will mainly fluctuate within a certain range in 2025, but the high point of the year will decrease compared to 2024.

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