Global PBR Prices Surge in Mid-October Amid Rising Butadiene Costs and Subdued Tire Sector Demand

In the global market, Polybutadiene Rubber (PBR) prices saw a significant surge by mid-October. This increase in the PBR price is primarily driven by the rising cost of its key feedstock, Butadiene, which bolstered overall pricing dynamics. Despite this, demand from the downstream tire sector remained subdued. Market participants are focusing on building up inventories on a needy basis and aligning tight feedstock supply with downstream consumption, contributing to the continuous rise in PBR prices.

In the European market, PBR prices have risen notably by mid-October. This surge in the PBR price is marked by the continuous increase in Butadiene prices, which saw a marginal rise of 1.4% in September. In the downstream automotive sector, total sales reached 208,848 units in September, marking a 5.8% increase compared to August, although this reflects a 7.0% year-on-year decrease, according to the KBA federal transport authority. This uptick in sales is positively impacting the demand for tires in the Original Equipment Manufacturer (OEM) segment. However, the Replacement Tire market has been underperforming. From a Tire industry standpoint, Michelin has temporarily paused production at some of its French factories due to falling demand. However, Michelin's factories producing passenger car tires remain operational. Michelin's CEO, Florent Menegaux, attributed the production slowdown to a broader global economic softening, particularly in the automotive sector, where sales have reportedly dropped by 20-25%. Despite lower demand from the downstream market, the consistent rise in Butadiene prices has been the primary factor driving the increase in PBR prices during this period. Furthermore, data from the Federal Statistical Office of Germany indicates that total exports of Butadiene-based rubber in primary form have been decreasing over the past few months. In July, total imports amounted to 8,914 MT, marking a 10.2% decrease from the previous month. This supply chain dynamic, coupled with the cost support from rising Butadiene prices, has reinforced the bullish trend in PBR prices across the European market.

In the US market, PBR prices saw a notable increase this week, largely driven by a 2.9% rise in Butadiene prices in September. However, vehicle sales in the US dropped sharply, with approximately 1.17 million units sold, marking a 21.4% decrease from the previous month and a 14.5% decline year-on-year. The disruption caused by Hurricane Milton affected both trading and manufacturing activities during this period. Despite these challenges, the downstream market outlook remains positive. Overseas demand, particularly from South America and Europe, has been moderate to low. According to the US Census Bureau, total exports of Butadiene-based rubber in primary form reached 19,607.518 MT, reflecting a 7.5% month-on-month decrease, as suppliers accumulated inventories only as needed.

As per ChemAnalyst's anticipation, the price of PBR is expected to exhibit a bullish trend in the upcoming sessions. This projected PBR price increase is primarily aligned with the continuous rise in Butadiene prices, which will likely provide strong cost support to PBR pricing dynamics. Additionally, the anticipated recovery in demand from downstream markets, particularly from the tire and automotive sectors, is expected to further reinforce the upward momentum in PBR prices. This combined effect of rising feedstock costs and recovering demand will shape the positive outlook for PBR in the near term.