Zhuochuang Information: Geopolitical conflict continues to weigh on the market, and domestic SBS production starts hit a historical low

By the end of February, since the outbreak of Middle Eastern geopolitical conflicts, international oil prices have continued to rise. As of the close on March 30, the May Brent crude oil price broke through $112 per barrel. Under high-cost pressure, domestic and foreign cracking units have continued to reduce their operating rates, coupled with a wide increase in China’s butadiene exports, driving butadiene prices to keep rising. Most SBS production companies are under cost pressure, with losses intensifying, which further affects SBS operation rates continuing to decline. In March, the domestic SBS operating load rate was 34.95%, down 10.99 percentage points from the previous month. Looking at April, if the Middle Eastern geopolitical conflict persists, the raw material butadiene will be affected by the reduction in domestic and foreign cracking units, and prices will continue to operate at high levels. The mainstream market pricing logic for SBS closely follows cost changes, and market prices may continue to rise. Coupled with the cost pressure on most units, companies’ production enthusiasm is poor, and there may be further production reduction expectations for major domestic SBS units. Domestic SBS output in April may hit a new historical low, with main suppliers continuing to cut production to maintain prices. Zhuochuang Information predicts that, supported by companies’ expected loss-cutting actions and wide-ranging supply reductions, the domestic SBS market price center may continue to move upward in April. Taking Huadong region 792E as an example, the expected market delivered price range is between 18,000 and 18,600 yuan/ton. (Zhuochuang Information)