SunSirs: China SBR Price Fluctuated Higher in 2023, or the Price may be Stable or Rise in 2024

In 2023, SBR fluctuated higher. According to the monitoring of SunSirs, as of December 31, 2023, the price of SBR 1502 in East China was 12,391 RMB/ton, an increase of 14.56% from 10,816 RMB/ton at the beginning of the year.

In the first half of the year, the price of SBR showed an "M" trend, with a slight increase in the price from January to February. On the one hand, the prices of raw materials such as butadiene and styrene have fluctuated upwards, supporting the cost of SBR; On the other hand, downstream tire production has significantly increased after the holiday, supported by the demand for SBR. In the first and second half of March, the price of butadiene and styrene slightly decreased, dragging down the cost side; From late March to early May, on the one hand, the overall raw material prices narrowed and stabilized, and on the other hand, starting from April, Lanzhou Petrochemical, Fushun Petrochemical, Li Changrong and other SBR plants began to operate under reduced load. The supply of SBR was slightly tight, and the market situation rebounded once again. Starting from mid May, the prices of raw materials such as butadiene and styrene have significantly declined, and the market for SBR has been dragged down by cost factors.

In the second half of the year, the SBR market first rose and then fell, rebounding at the end of the year. The raw material butadiene has risen from 5,817 RMB/ton in late June to the highest point of 8,750 RMB/ton in late September, an increase of 50.40%; Styrene has risen continuously from 7,163 RMB/ton to the highest point of 9,766 RMB/ton in mid September, an increase of 36.34%; Supported by costs, the price of SBR has been rising all the way. Starting from mid to late September, prices of raw materials such as butadiene and styrene began to decline again due to the decline in crude oil. In addition, downstream production of semi steel tires gradually decreased, resulting in a weak cost and demand for SBR. At the end of the year, raw material prices slightly increased again, and the price of SBR rebounded accordingly.

Summary: In 2023, the overall supply and demand of SBR remained stable, and the market trend was mainly influenced by raw material prices.

Prospects for the 2024 SBR market

Cost side: More new production capacity for butadiene and styrene, expected decrease in cost side for SBR

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.

Starting from 2020, styrene entered a large-scale production cycle, and domestic production capacity began to be significantly released. The annual growth rate of production capacity from 2020 to 2022 was as high as 22.1%. In 2023, domestic styrene production capacity increased by 3.7665 million tons, reaching 21.2515 million tons by the end of 2023. In 2024, it is expected that there will still be 2.08 million tons of new production capacity for domestic styrene, with a total of approximately 3.12 million tons of new production for downstream ABS, PS, and EPS. Due to 60% of the new production of styrene in the fourth quarter, it is expected that the price of styrene will be high before low in 2024.

Supply side: In 2024, the supply side of SBR remained stable with a small increase, mainly in the form of solution polymerized butadiene styrene.

As of the end of 2023, the total production capacity of SBR in China was 1.855 million tons/year (milk polymerized SBR production capacity was 1.44 million tons/year, accounting for 77.63% of the total production capacity; solution polymerized SBR production capacity reached 415,000 tons/year, accounting for 22.37% of the total production capacity). In 2024, the newly added production capacity is about 100,000 tons/year, all of which are solution polymerized SBR.

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 SBR 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.

SunSirs analysts believe that the supply of SBR will slightly increase in 2024. Downstream tire expectations are improving, while cost pressures are decreasing. Overall, driven by demand, the price center of SBR in 2024 may shift upwards compared to 2023. However, due to the impact of cost decline, it is expected that the price peak will not change much compared to 2023.

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