The market for SBR is expected to fluctuate and rise in 2024

In the first three quarters of 2024, SBR experienced a volatile rise, followed by a slight decline from its peak in the fourth quarter, and a 20.24% increase at the end of the year compared to the beginning of the year.

The prices of raw materials butadiene and styrene increased in the first quarter, and the cost of SBR continued to rise; After the Spring Festival, downstream tire production rapidly increased, and demand for SBR improved; Under the stimulation of cost and demand, the price of SBR has significantly increased. In the early stage of the second quarter, the prices of raw materials butadiene and styrene remained high, but there was a pullback in tire production, especially for all steel tires, which dropped to less than 50% at one point. Downstream support for SBR was weak, and the overall market situation of SBR was mainly narrowly consolidated under the influence of cost support and weak demand. At the end of the second quarter, the price of raw material butadiene rose sharply again, and downstream tire production also increased, driving the price of SBR to rise again. In July and August, the price of raw material butadiene styrene fell from a high level, and the cost center of SBR shifted downwards, resulting in a slight decrease in price. 8. In September, natural rubber was affected by typhoon weather, and there were concerns about tight supply in the market. Shanghai rubber prices quickly rose, which led to a significant increase in synthetic rubber prices. After the National Day holiday from October to November, accompanied by a cooling of macro sentiment and a high drop in the prices of raw materials such as butadiene and styrene, the price of SBR has fallen from a high level as the center of gravity shifts downwards. At the end of the year, raw material prices stabilized at a high level, downstream production remained stable, and narrow range consolidation of SBR was the main focus.

Basic Status of SBR

By 2024, China's SBR production capacity is expected to reach 1.875 million tons, accounting for approximately 28% of the global SBR production capacity. The production capacity of latex SBR is 1.46 million tons. In the first quarter of 2025, Yulong Petrochemical's 60,000 tons/year SSBR unit and Shenhua Chemical's new 220,000 tons/year ESBR unit are expected to be put into operation. The domestic production of SBR from January to November 2024 is around 940,000 tons, with little change compared to 2023.

The inventory of domestically produced SBR in 2024 has been in a state of destocking for the first three quarters, which has a significant impact on the market situation of SBR. In 2024, there was a narrow fluctuation in the start of production of SBR. In the early and later stages, the start of production was relatively high at 60-70%. In the middle of the year, some units were shut down for maintenance, and the start of production of SBR decreased to around 50-60%.

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 is low and the demand for dragging rubber is low, the overall consumption of SBR in tire production is relatively high year-on-year due to the sustained improvement in demand for semi steel tires.

Outlook for the SBR Market in 2025

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. The total planned production capacity of domestic styrene in 2025 is about 2.15 million tons per year. Domestic styrene production capacity continues to expand, and the current supply of domestic styrene factories is sufficient to supply most downstream production. At the same time, competition among domestic enterprises is gradually intensifying, and styrene prices may continue to stabilize at a low level in 2025. The support for SBR on the raw material side is expected to weaken in 2025.

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 SBR.

Under the influence of the above factors, it is expected that the price of SBR will mainly fluctuate narrowly in 2025, but the high point of the year will decrease compared to 2024.

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