Polybutadiene

Analysis of Recent Market Dynamics for Butadiene Rubber (BR)

I. Market Dynamics Intelligence
(A) Price Trends
1. East China Region: As of July 28, 2026, the butadiene rubber price in the East China region stood at RMB 13,540/ton, down 3.70% from RMB 14,060/ton on the previous Friday. On the futures front, the BR2609 main contract plummeted 6.22% on July 28 to close at RMB 12,120/ton; its weekly decline totaled nearly RMB 900. In the spot market, the ex-factory price of butadiene rubber was reduced by RMB 400/ton to RMB 13,200/ton. On July 25, major East China suppliers—Daqing and Dushanzi—quoted RMB 14,000–14,200/ton; Zhenhua quoted approximately RMB 13,950–14,100/ton. On July 22, mainstream quotations for butadiene rubber from Sichuan and Dushanzi ranged between RMB 13,600–13,700/ton.
2. First-Half Performance: In H1 2026, butadiene rubber prices rose then retreated overall. As of June 30 closing, the average H1 2026 reference price for BR9000 in North China was approximately RMB 14,078/ton—up 9.88% year-on-year versus H1 2025. The peak price occurred at end-March at RMB 18,000/ton, representing a 22.45% increase over the H1 2025 high; the trough occurred in early January at RMB 11,000/ton, unchanged year-on-year versus the H1 2025 low.

(B) Cost Structure
1. Butadiene Prices: Geopolitical risk premiums in the Middle East have rapidly dissipated, triggering a sharp decline in international crude oil prices and thereby dragging down butadiene prices. Butadiene prices surged continuously through March 2026, reaching a 9-year high; since mid-April, prices have retreated. In H2 2026, domestic butadiene prices may rebound initially before trending lower overall, with a projected trading range of RMB 8,500–12,000/ton. The peak is likely to occur in Q3, while the trough may emerge in Q4.
2. Capacity Status: In 2025, butadiene capacity is scheduled to increase by 980,000 tons, bringing total national capacity to an estimated 7.677 million tons—a 14.6% YoY growth. In H2 2026, some domestic butadiene units remain under maintenance, and newly commissioned facilities have yet to deliver meaningful output; thus, supply-side support for butadiene prices may persist through Q3. However, as planned maintenance activity declines entering Q4—and new facilities commence operation—supply is expected to rise significantly, weakening price support.

(C) Supply Side
1. Plant Utilization: In H2 2026, aside from shutdowns at Yangzi Petrochemical and Weite Chemical, no other plants have announced maintenance plans. Moreover, the commissioning of Tarim Petrochemical’s BR unit in Q3 and stable operations at Ningbo’s facility will intensify supply-side pressure on the butadiene rubber market. As of end-June 2026, average H1 2026 high-cis BR plant utilization stood at approximately 65.93%, down ~2 percentage points YoY.
2. Capacity & Output: In 2025, butadiene rubber annual capacity is slated to expand by 190,000 tons, reaching 2.162 million tons—a 9.63% YoY increase. In October 2025, synthetic rubber output rose 12.5% YoY to 782,000 tons.

(D) Demand Side
1. Tire Industry:
- Plant Utilization: In July 2026, downstream tire plant utilization edged up slightly: domestic semi-steel tire production utilization increased modestly from 70% at month-start to ~75% by month-end; Shandong-based full-steel tire utilization rose from 62% to ~65%. However, divergent trends are expected in H2 2026: semi-steel tires face headwinds—including EU anti-dumping/countervailing investigations and weakening OEM demand—leading to weaker order inflows and potentially declining utilization; full-steel tires benefit from reduced scheduled maintenance, stronger replacement and export demand, and policy-supported OEM orders, supporting higher utilization.
- Inventory Levels: As of July 24, 2026, domestic full-steel tire finished-goods inventory stood at 40.3 days; semi-steel tire inventory reached 45.6 days.
2. Overall Demand: China’s downstream consumption is projected to grow at a low pace in H2 2026. Considering anticipated changes in full-steel and semi-steel tire utilization, overall demand growth potential remains relatively limited.

(E) Imports & Exports
1. Imports: In October 2025, China imported a combined total of 667,000 tons of natural and synthetic rubber (including latex). In H1 2026, China exported 4.94 million tons of rubber tires—a 4.9% YoY increase—while export value totaled RMB 82.6 billion, down 1% YoY.
2. Export Policy Impact: In 2025, Chinese tires faced escalating trade barriers. Although President Trump’s proposed U.S. trade policies—including broad-based tariff hikes and elevated duties on Chinese imports—may have only limited direct impact on U.S.-bound tire volumes, they exert indirect pressures. Conversely, markets beyond the U.S. and EU—including Mexico, Brazil, and the Middle East—continue exhibiting strong demand for competitively priced Chinese vehicles and tires, providing robust support to China’s tire export market.

II. Analysis & Assessment
(A) Causes of Price Decline
1. Weakening Cost Support: Dissipation of Middle East geopolitical risk premiums and sharp declines in international crude oil prices have driven down butadiene prices, eroding cost support for butadiene rubber.
2. Mounting Supply-Demand Pressure: On the supply side, barring temporary shutdowns at select facilities, most plants operate without maintenance plans, and new-capacity ramp-ups in Q3 further elevate supply pressure. On the demand side, overall incremental demand remains constrained in H2 2026; divergent tire-sector utilization trends—weak semi-steel orders amid elevated finished-goods inventories—exacerbate imbalance.

(B) Key Market Influencing Factors
1. Macroeconomic Environment: Domestic economic conditions are expected to remain broadly stable in H2 2026, whereas external uncertainty persists—including Middle East geopolitical developments impacting crude oil volatility, U.S. Treasury market dynamics, Fed rate-hike expectations, EU plans to impose additional tariffs on Chinese goods, and global inflationary pressures—all contributing to complex and volatile external export conditions that exert intermittent strong influence on short-term BR market dynamics.
2. Related Commodities: Natural rubber supply enters its seasonal growth phase, yet weather-related disruptions constrain overall output expansion; prices are therefore expected to remain elevated. Consequently, the substantial price spread between natural rubber and butadiene rubber will persist, underscoring natural rubber’s continued supportive and leading role for butadiene rubber pricing.

III. Outlook
(A) Short-Term Forecast
Near-term butadiene rubber pricing remains highly correlated with crude oil fluctuations. Should international oil prices sustain weakness, raw material cost support will further deteriorate, maintaining BR’s bearish trend.

(B) Long-Term Forecast
1. Price Trend: Butadiene rubber prices in H2 2026 are expected to rebound briefly before trending downward overall, with the average price level likely below H1 2026 levels. Monthly average prices are projected to fluctuate within RMB 11,600–13,300/ton.
2. Seasonal Pattern: Q3 2026 presents a notably higher probability of price increases than decreases, primarily driven by front-loaded demand during the traditional peak season and weather-induced supply constraints (e.g., typhoons) in key natural rubber-producing regions. However, new-capacity additions in Q3 may cap upside potential relative to typical seasonal strength. In Q4, waning Middle East impact, softer downstream tire order intake, and accumulated supply-demand imbalances may weigh heavily on pricing.