“With adverse information gathered in the afternoon market, the synthetic rubber market still has a downside potential and it is impossible for the enterprises to make profit.” Wang Chunming, general manager of Shandong Ruiyang Chemical Trading Co., Ltd., analyzed.

Trading was still Weak

Wang Chunming expressed that the rapid rise in price of synthetic rubber in September was triggered by sharp rise in crude oil because the oil field in Saudi was attacked. However, restrained by the fundamentals, the rise trend was unsustainable, the bearish atmosphere of the market was strong, and the synthetic rubber market continued to fall after the National Day. So far, in Shandong area, the quoted price of Qilu 1502/1502E had been 10500 Yuan (price per ton, the same below) and that of Qilu butadiene rubber had been 11100 Yuan. The price difference of butadiene styrene rubber from high to low had been 1200 Yuan and the price difference of butadiene rubber had been up to 1700 Yuan.

So far, the operating rate of synthetic rubber has been kept stable basically. To reduce the output and sale pressure, although the suppliers lower the price, the market trading is not obviously improved and continues to be weak, the situation where partial source of goods is upside down still continues. The market price of butadiene rubber remains low in recent two years, the offer of the merchants of butadiene styrene rubber is still weak and the downstream purchase has no obvious enlarged turnover.

Affected by the market downturn, the inventory of synthetic rubber shows a growth trend. Wang Yongtao, analyzer of JLC, introduced that on October 25, the rubber inventory of Shanghai Futures Exchange was 411,200 tons, with a daily increase of 2300 tons, which also gave the market pressure.

Cost overhang and deficit of over 1000 Yuan have become the theme of synthetic rubber enterprises. He Junsong, salesman of Jilin Petrochemical, introduced that the current deficit of butadiene rubber was about 2420 Yuan and the deficit of butadiene styrene rubber was about 2210 Yuan.

The industry insiders thought that the peak season had passed, the risk of fall in synthetic rubber afternoon market was difficult to be eliminated and the deficit status of production enterprises in the short term would still continue.

The Price of Raw Materials Continues to Fall

The price of butadiene, as a raw material, went down after National Day holidays, which is difficult to bring cost support to the synthetic rubber market. So far, the price of butadiene in Shandong market has fallen by 16.22% compared with that at the beginning of October while that in East China market fell by 21.77%.

Seen from the device operation, the butadiene device of Jiutai Energy, Maoming Petrochemical and Guangzhou Petrochemical was shut down for overhaul, however, Jiutai Energy and Maoming Petrochemical had inventory; the device of Liaotong Chemical recovered normal to restart export sales; and Fushun Petrochemical also recovered export sales.

Liu Junpeng, analyzer of Zhongyu Information, expressed that affected by hindered market trading, the export sale of northeast enterprises was frustrated successively, Liaotong Chemical once changed into the mode of export sale at fixed price, and Fushun Petrochemical also had continuous abortive auction with the supply price lowered, which made the bearish atmosphere of the market strong.

As the price of butadiene fell to be low, partial downstream rigid demand accepted order to stimulate the market turnover to be better, however, the whole demand still appeared to be low. Entering November, the butadiene device of Maoming Petrochemical and Guangzhou Petrochemical will recover operation, plus the additional device inventory production plan of Zhejiang Petrochemical, Hengli Petrochemical, etc., the supply side of the market is still abundant, and it is predicted that the domestic butadiene price will still become lower.

Seen from the outer, although the price of butadiene has continuous sharp fall, the price is equivalent to about RMB 8813 Yuan, the benchmarking domestic factory offer is almost close, compared with the supply price of 10500 Yuan of Sinopec East China, the price of the outer still has absolute advantage. Therefore, the prediction that the imported sources of goods will increase in China also gives butadiene market pressure and it is difficult to form support for synthetic rubber in the aspect of cost.

The Support for Demand was Weak

Seen from the downstream of synthetic rubber, the operating rate of the industries such as rubber products was difficult to be increased under the influence of environmental protection factor, and the support for demand of the raw material synthetic rubber was weak.

It is learned that from November, the main producing areas of rubber and rubber products in the north will enter the heating season and the frequency of hazy weather will increase, which will directly affect the enterprise production and limited production and even shutdown may occur frequently. From October 19 to October 25, partial production enterprises of rubber and products in the north experienced the limited production, which would increase the disturbance of the market.

Lately, the Department of Ecological Environment of Shandong Province issued yellow or orange warning of heavy pollution weather in multiple prefectures and municipalities in Shandong and initiated emergency response, the petrochemical enterprises implemented corresponding measures of limited production or shutdown according to the environmental protection performance level, which slightly pressed the terminal demand. A part of tire factories issued the notice of forbidding the vehicles under the National 4th Standard entering the factory under the heavy pollution weather, the raw materials purchasing and delivery of the factory was slightly limited, in addition, the market gradually entered the demand off-season at present, the operating rate of the tire enterprises has slightly fallen to  be 54%.

As for the automobile output and sales volume, the latest data shows that in September, the automobile output and sales volume were 2,209,000 vehicles and 2,271,000 vehicles respectively, which fall by 6.2% and 5.2% respectively compared with that in the same period of last year, and the fall in output is enlarged by 5.7 percentage point compared with that in last month. From January to September, the automobile output and sales volume were 18,149,000 vehicles and 18,371,000 vehicles respectively, which fall by 11.4% and 10.3% respectively compared with that in the same period of last year

The industry insiders thought that the automobile output and sales volume were difficult to be largely improved, it was difficult to form strong support for the purchasing of the upstream raw material synthetic rubber and downward adjustment of synthetic rubber might be inevitable.