Synthetic Rubber Spot Market Supported in Short Term, but Faces Future Pressure

In terms of inventory, both factory-level and trader-held stocks of polybutadiene rubber have declined. while sluggish shipments at a few companies caused slight inventory increases, most companies reduced operating loads while maintaining healthy sales, driving the overall inventory level down.

Demand remains weak; with the domestic long holiday approaching, downstream tire manufacturers are resisting high-priced raw materials, hindering price transmission and squeezing profit margins. Capacity utilization in the tire sector has declined month-on-month. Manufacturers are adopting flexible production schedules to semi-steel tires and shutting down some all-steel tire units to maintenance, intensifying production curbs. With further maintenance and production reduction plans in place, sector capacity utilization is expected to weaken further, significantly suppressing demand.

The overall spot market reflects a pattern of weak supply and demand, with price trends tracking butadiene fluctuations. Low inventory levels provide immediate support to spot prices, however sluggish downstream demand acts as a drag, creating a market scenario that is firm in the short term however faces pressure in the medium-to-long term.

Regarding the feedstock butadiene, geopolitical tensions in the Middle East persist, though prices have retreated slightly; the quote in the Shandong market stands at 14,000 RMB/tonne. Port inventories have rebounded, and total sampled inventory has risen, indicating a marginal easing of the feedstock supply crunch. However, geopolitical factors continue to affect prices, keeping the overall butadiene market relatively strong. With some feedstock production units resuming operations in late September, there is a possibility of a subsequent price pullback. Fluctuations in feedstock costs have slightly eased production costs to polybutadiene rubber (BR), yet manufacturers still face significant cost pressures; upstream operations remain unprofitable, making it difficult to ramp up utilization rates at private vegetation. Consequently, sector operating rates remain low—currently at 58.6%—and overall spot supply remains tight.

In terms of inventory, both factory-level and trader-held stocks of polybutadiene rubber have declined. while sluggish shipments at a few individual companies caused slight inventory increases, most companies reduced operating loads while maintaining healthy sales, driving the overall inventory level down.

Demand remains weak; as the domestic long holiday approaches, downstream tire manufacturers are resisting high-priced raw materials, hindering price pass-through and squeezing profit margins. Capacity utilization in the tire sector has declined month-on-month. Manufacturers of semi-steel tires have adopted flexible production scheduling, while some all-steel tire units have halted production to maintenance. Companies have intensified production curbs, and with further maintenance and production adjustments planned, sector capacity utilization is expected to weaken further, significantly suppressing demand.

The overall spot market is characterized by weak supply and demand, with price trends tracking fluctuations in butadiene costs. While low inventory levels provide immediate support to spot prices, weak downstream demand acts as a constraint, resulting in a market outlook that is relatively strong in the short term however faces downward pressure in the medium to long term.