Butadiene Fundamentals Strong, BR Rubber Hits Daily Limit

  On January 23rd, butadiene rubber (BR) continued to hit the daily limit in early trading, currently up 6.99%. A research report from Guotai Junan Futures on January 23rd indicates that in the short term, capital flow determines capital price. Against the backdrop of a macro narrative of incremental capital allocating to the chemical sector, butadiene and butadiene rubber are expected to remain strong in the short term. There are two main reasons: first, in the presence of substitution demand within the rubber sector, overall synthetic rubber industry spot transactions remain neutral, maintaining high apparent demand for synthetic rubber; second, butadiene's strong short-term fundamentals are driving up the cost of synthetic rubber. On the butadiene raw material side, butadiene currently presents a strong reality and strong expectations. On the supply side, ethylene cracking operating rates in China remain high, and domestic butadiene production is at a high level compared to recent years. On the other hand, ethylene plants are facing pressure on profits, limiting operating rates in the Asian region. As a result, supply is contracting, and rising international butadiene prices are driving China's butadiene prices higher. On the demand side, synthetic rubber maintains high demand for butadiene due to high production profits, while ABS and SBS demand for butadiene remains stable. Overall, butadiene's short-term fundamentals are neutral to strong, providing support for spot prices. On the butadiene rubber side, apparent demand remains high, and there are no significant contradictions in the fundamentals, mainly fluctuating following the cost side.