HOW LONG WILL THE RUBBER OVERSUPPLY LAST?...NE Asia Synthetic Rubber - 2018 • Polybutadiene – NE...

HOW LONG WILL THE

RUBBER OVERSUPPLY

LAST?

PAUL BRISSONVICE PRESIDENT

C4 OLEFINS & DERIVATIVES

ARGUS MEDIA, HOUSTON

Copyright © 2018 Argus Media group. All rights reserved.

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Market Reporting

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How Long Will the Rubber Oversupply LastAPIC, Kuala Lumpur, Malaysia

Paul BrissonVP – C4 Olefins & DerivativesHouston, Texas, USA21 August 2018

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Houston

Moscow

Singapore

Dubai

New York

Beijing

Kiev

Tokyo

Astana

Shanghai

Rio de Janeiro

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Calgary

Brussels

Cape Town

Mexico City

Berlin

San Francisco

Sydney


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Presentation Topics

• Why is there so much synthetic rubber capacity in the world?

– Key events that triggered expansion

– Rubber expansion

– Butadiene price volatility

• Outlook - the next five years


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China and US auto light vehicle sales


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China Radial Tire Output


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Polybutadiene capacity growth


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SBR capacity growth


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China Synthetic Rubber Production


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China butadiene production


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China butadiene supply

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Global butadiene pricing

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What is the future for China’s auto industry?

• China will remain the largest auto market in the world

• #1 priority – improving air quality in major cities

– China emits more CO2 than any other country in the world

– Beijing is the most polluted city in the world

– Reducing traffic congestion in major cities

– Developing sustainable transit

– Promoting conversion to electric vehicles (EV)

• Light vehicle sales growth must slow down

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China light vehicle sales

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NE Asia drives the global butadiene market


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NE Asia butadiene capacity vs. demand


NE Asia butadiene production vs. consumption


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NE Asia butadiene trade


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NE Asia PBR / SBR Capacity and Production


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NE Asia Synthetic Rubber - 2018

• Polybutadiene– NE Asia – 51% global capacity– NEA Asia – 56% global production– China – 29% global capacity– China – 32% global consumption – Demand growth < 2%/yr

• Styrene butadiene rubber (SBR)– NE Asia – 43% global capacity– NE Asia – 52% global production– China – 24% global capacity– China – 25% global production– Demand growth eSBR – 1.5%/yr– Demand growth sSBR – 4.5%/yr


Conclusions

• There will be adequate capacity to produce PBR and SBR in the coming years.

• Regional growth will be focused in China. • Demand growth along the supply chain of light vehicles,

tires, synthetic in China is slowing while China shifts attention to infra structure and environmental issues.

• NE Asia will remain structurally short of butadiene.• NE Asia will remain a significant net importer of butadiene

from all other regions in the world, possibly including the US.

• The “oversupply of rubber” is a misconception – the shortage of butadiene in NE Asia is the real problem.


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