China BR Market Sees Volatile but Significant Upward Trend

Regarding costs, the price of the raw material butadiene surged due to plant maintenance and tightened spot market availability. This compressed production margins to BR—even pushing them into negative territory—thereby creating a strong cost floor to spot prices. Major petrochemical companies repeatedly raised ex-factory quotes, driving up market offers. According to the SunSirs commodity analysis system, the price of butadiene reached 11,533 RMB/ton by August 18, up 15.14% from 10,016 RMB/ton at the start of the month.

On the supply side, sector operating rates remained in the 74%–75% range. Maintenance at some facilities, combined with strong export performance, led to a continued decline in domestic inventories to comparatively low levels; tight spot supplies helped alleviate pressure from inventory accumulation.

Demand remains in the traditional off-season. While operating rates at tire manufacturers saw a slight rebound, the recovery in end-user markets was limited. Downstream buyers showed resistance to high-priced raw materials, largely sticking to on-demand purchasing; extensive restocking has yet to begin, meaning demand has not generated the momentum to drive prices up proactively. As of August 14, the operating load to semi-steel tires at domestic tire companies was 64.32%, while the rate to all-steel tires at Shandong-based companies was 63.01%.

Spot price trends and moving averages to BR indicate that prices traded sideways from late July to early August, with immediate moving averages intertwining—signaling a stability between bullish and bearish forces. By mid-August, spot prices rose above all immediate moving averages, giving the bulls the immediate advantage and creating momentum to test previous rebound highs. However, medium-term moving averages have not yet fully fanned out upwards; significant resistance remains overhead, and the conditions to a sustained, one-way direction are currently lacking. In the short term, the market is expected to exhibit evaporative environment with an upward bias, though a pullback after an initial rally is likely; close attention should be paid to the effectiveness of moving average support, as a drop below immediate moving averages would invalidate the rebound direction.

Overall, immediate price action is primarily driven by costs. Coupled with the approaching peak demand season ("Golden September, Silver October") and anticipated inventory restocking to tires, cis-BR is likely to maintain a evaporative yet firm direction. While there is room to further upside in spot prices, the extent of the rise will be limited. In the medium to long term, however, caution is warranted regarding the possible supply shock from the discharge of new production capacity.