As the downstream demand season has not yet kicked in, processing companies continue to keep their inventory at a relatively low safety level. Despite the end of September, the price of butadiene rubber has increased by approximately 100 yuan per ton compared to the end of August, reaching between 15,600 and 15,900 yuan per ton. However, market participants remain uncertain about the direction of the butadiene rubber market. During the National Day holiday, businesses were hesitant to place orders, and the unexpected reduction in supply has helped maintain price stability.
Looking ahead, the supply-demand relationship for butadiene rubber is expected to continue improving. However, it's difficult to predict a significant upward movement in market prices, and instead, prices are likely to fluctuate within a narrow range after hitting a resistance level. Here’s why:
First, the supply-demand balance is gradually improving. October is traditionally a peak consumption period for butadiene rubber. Additionally, the natural rubber market is facing supply shortages due to natural disasters, which could have a significant impact on the butadiene rubber market, leading to an increase in consumer demand. Although Daqing is expected to operate at full capacity and Jinzhou is set to resume production, the news that Yuehua will shut down may actually increase domestic supply. Overall, the supply-demand relationship is expected to continue trending positively.
Second, the price of raw butadiene has been declining slowly, which supports the production of butadiene rubber. As some Asian butadiene facilities begin to resume operations after maintenance, along with increased ocean freight shipments, the overall supply in Asia—including China—is expected to rise. This should ease the tight supply situation, and the domestic butadiene market is showing signs of a slight downward trend.
Third, natural rubber continues to support the market. Typhoon "Dawei" hit Hainan on August 26th, causing heavy losses in the tapping season. In the reclamation areas of Hainan, 4.7 million trees were discarded, 2.1 million were broken, and 11.05 million showed partial collapse. The main branches totaled 31.34 million, and the sudden drop in production is a fact. Natural rubber is expected to once again support market prices due to the supply shortage. Experts predict that "Dawei" could lead to historic breakthroughs in Hujiao, and with this linkage, the spot market is also expected to reach new heights.
Taking all these factors into account, if no major incidents occur, the butadiene rubber market is expected to experience short-term volatility after the recent turbulence has stabilized.
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