China Drying Network News Recently, the second production line of Ningbo Keyuan Plastic Co., Ltd. styrene-butadiene-styrene (SBS) block copolymer plant was officially put into operation. At this point, the company's annual output of 70,000 tons of SBS projects have been completed. As of now, the total annual production capacity of SBS in China has reached 790,000 tons, showing an oversupply situation. It is estimated that in 2014, the total annual production capacity of SBS in China will exceed 1 million tons, and the consumption will be only about 750,000 tons. In the next two years, China's SBS market will maintain the oversupply situation.
SBS is a styrenic thermoplastic elastomer, which is also the one with the largest output (more than 70%), the lowest cost, and the wide application. It also has the characteristics of plastic and rubber, and is called the "third generation synthetic rubber." The product is widely used as sealing material and hot melt adhesive, and is also used in the fields of shoemaking, asphalt modification, polymer modification, liquid sealing material, waterproof coating, electrical wire, auto parts, medical equipment, office automation and the like.
At present, China's SBS is mainly used for shoemaking, asphalt modification, and polymer modification. Consumption in these areas accounts for 42%, 26%, and 14% of total SBS consumption. Constrained by macro-control and economic downturn, the demand for SBS has slowed down in the two major areas of shoemaking and asphalt modification. In 2011, domestic SBS consumption was only around 600,000 tons. The import volume of SBS dropped from 100,000 tons in 2010 to 72,000 tons. Exports increased from less than 10,000 tons in 2009 to 49,000 tons.
For a period of time in the future, as China's economic growth rate declines, the demand for SBS from shoemaking and asphalt modification will likely continue to slow. In particular, the performance of SBS soles is relatively poor. Manufacturers tend to choose shoes with better performance such as EVA and PU, which will also lead to a reduction in SBS consumption. In terms of adhesives, SBS has a market share in the field of pressure sensitive adhesives and hot melt adhesives because SBS itself is non-toxic and tasteless, and its production process is simple. However, this does not contribute much to the overall SBS demand.
From the supply side, there are still many new SBS projects in China. Taiwan’s Li Changrong Chemical Company plans to build a new 100,000 t/y SBS plant in Huizhou, Guangdong Province. Daqing Petrochemical Company will build a new 80,000 t/y SBS plant, and Bluestar Group will build a new 50,000 t/y SBS plant. Shandong Dongying Economic Development Zone plans to build a new SBS plant with an annual output of 100,000 tons. Given the uncertainty of demand, it is worth noting that these new production capacities can be digested by the downstream market.
With the development of other synthetic rubbers and ABS production units, the supply of butadiene to raw materials for these new SBS installations may be tight. The butadiene currently used in Huizhou Lichangrong's SBS plant is obtained from China Shipping Shell via pipeline. However, due to the limited butadiene production capacity of China Shipping Shell, the company's newly-built 100,000 t/y SBS plant will consider buying butadiene from Taiwan. Daqing, Lanxing, and Shandong butadiene production companies are supporting other types of synthetic rubber on the downstream, and the demand for butadiene from the new SBS installations is also large. The impact of butadiene price fluctuations on the SBS market will remain significant.
In recent years, as demand has begun to show a declining trend, the price of upstream butadiene has soared and the SBS market has become more volatile. In the first half of last year, as the price of butadiene rose steadily, the SBS market price went up. In August, the ex-factory prices of dry rubber and oil gel both exceeded 25,000 yuan (ton price, the same below). However, SBS prices fell sharply due to continuous lower prices of butadiene. In early November, the price of oil gel in East China fell to a low of 18,500 yuan a year, and the price was between 19,000 and 20,000 yuan at the end of the year.
This year, dragged by the sluggish demand, the domestic SBS market showed a downward trend. At the beginning of the year, due to the firm price of the upstream market and tight supply from the market, the price of oil gel in East China was close to 22,000 yuan. However, as the price of butadiene declined, the bearish atmosphere in the market aggravated and the market turned again. At the end of May, the price dropped to a low of 16,000 yuan, after which the market rebounded but did not break through the 20,000 yuan mark. From July to August, the butadiene prices once again entered a downward path, and the SBS price oscillated. As of now, the price of Yanshan gum 4452 in East China market is between 16500 and 16800 yuan, and the price of baling 792 gum is between 22300 and 22500 yuan.
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