On August 13, amid ongoing tensions in the Middle East, crude oil prices remained elevated with high volatility. Additionally, the price of butadiene strengthened, enhancing cost support for BR and driving its sustained upward trend. The main contract for synthetic rubber futures, BR2609, rose by 2.23%.
According to a CCTV News report on the 12th, the Iranian "Persian Gulf Strait Authority" stated that repeated claims by US officials about the reopening of the Strait of Hormuz do not alter the facts. The strait remains closed, and it will not reopen unless the US accepts Iran's conditions. Overnight negotiations between the US and Iran made no progress, with the overall situation remaining deadlocked. Iran's stance is firm, but clashes between the two sides are restrained. The expectation of reopening the Strait of Hormuz remains uncertain, and oil prices continue to fluctuate at high levels, awaiting guidance from geopolitical developments.
Looking at the capacity utilization rates of major downstream butadiene sectors, most have shown improvement. The SBS and ABS industries saw notable increases in capacity utilization, while only the styrene-butadiene rubber industry experienced a slight decline. The increase in butadiene rubber capacity utilization was mainly due to minor adjustments in load for certain units, while styrene-butadiene rubber was impacted by the two-line operation of Lanzhou Petrochemical and narrow production schedule adjustments earlier this month. The SBS and ABS sectors were primarily driven by load increases at some production enterprises. At the same time, recent news of butadiene export transactions has emerged, improving both domestic and external demand for butadiene, which has boosted its price.
Although the operating rate for butadiene rubber remains high, inventory levels are manageable when considering the combined effects of imports and exports. Due to the relative weakness of butadiene compared to butadiene rubber in the past, profits from the butadiene chain have shifted downstream. This has kept production margins for butadiene rubber profitable, encouraging higher operating rates among producers. The industry's operating rate and production have both returned to high levels. However, factory inventories of butadiene rubber have not shown significant accumulation. This is mainly due to tight supply-demand dynamics overseas and price advantages domestically, which have driven a sustained increase in China's net exports of butadiene rubber this year. Demand growth has limited inventory accumulation.
Looking ahead, the Middle East military conflict continues, and uncertainties surrounding crude oil supply and transportation in the region are unlikely to ease in the short term. Under the broader tight supply of butadiene in Asia, expectations for China's exports of butadiene and butadiene rubber remain strong. However, with the restart of Shenghong Petrochemical's butadiene unit and the expected arrival of US imported cargoes in the Asian market in August-September, the supply of butadiene spot resources is expected to be sufficient. The downstream synthetic rubber industry is expected to maintain relatively healthy profits and high operating rates. The SBS operating rate is also rising, but profitability in the downstream ABS industry is poor, limiting overall domestic demand growth for butadiene. Additionally, as production margins for butadiene rubber remain acceptable, its operating rate has risen to high levels. The gradual release of new capacity from Tarim further adds to supply increases. Overall, short-term cost support for BR is strong, and demand support remains, keeping BR on a strong trajectory. However, supply in the upstream and midstream of the chain is expected to increase. Future focus should be on developments in the Middle East situation and whether butadiene port inventories can continue to decrease. In terms of strategy, BR long positions can be partially closed for profit at higher levels, with attention on the resistance level of 13,700 for the BR2610 contract.
Risk Warning: Short-term escalation of the Middle East conflict or a sustained increase in butadiene exports could pose risks.