In China, isoprene rubber prices plummeted sharply over the initial three weeks of September, with a total decline of 11.81%, as the market grappled with elevated inventories, subdued downstream demand, and discount-driven selling pressure.
For the week ending on September 5, isoprene rubber prices declined 3.9%, driven by ongoing import flows and weak conditions in freight. Consistent operating rates from suppliers in Russia and Japan helped facilitate an uninterrupted flow of isoprene rubber into Chinese ports, while Drewry’s Intra-Asia Container Index dropped 2% to $582 per 40ft container on August 31, resulting in lower landed costs for buyers. From January to August, China imported 5.373 million tons of natural and synthetic rubber, including latex, a 19% increase year-on-year, raising additional oversupply worries and compounding downward pricing pressure from sellers attempting to liquidate excess inventories.
Demand dynamics for isoprene rubber remained mixed. The construction sector continued to show signs of contraction, with the business activity index falling to 49.1%, a decrease of 1.5 percentage points from the previous month. On the other hand, the automotive sector provided some support, with passenger vehicle retail sales at 1.952 million units in August, a year-on-year increase of 3% and a month-on-month gain of 7%. Specifically, sales of new energy vehicles were 1.079 million units, a year-on-year increase of 5% and a month-on-month increase of 9%. However, this resilience was insufficient to offset the drag from the construction and inventory overhang of isoprene rubber.
The downward trend continued in the second week, with isoprene rubber prices down another 3.67% as of September 12. Evidently, radial-tire plants in Shandong and Jiangsu continue to run strongly in the 85 - 88% range, and export bookings for isoprene rubber continued as of September 9. Despite this, domestic demand remained lackluster. The weekly report issued on September 11 acknowledged a flat demand for conveyor belts and a baseline adhesive demand in footwear and automotive. Then, the September 9 inventory report noted that processors appear to be only buying what they need immediately, providing no evidence of either the anticipated National Day pre-buy or the expected Belt-and-Road project awards, both of which are historically strong demand indicators.
By the week ending September 19, isoprene rubber prices fell again, by 4.24%. Tire and rubber converters continued to buy only what they needed, with reports on September 18 indicating that there had been no pre-holiday or Year-End replenishments. Inventory levels for isoprene rubber remained elevated, which forced sellers to lower their offers. Additionally, the lack of any new infrastructure demand and the slowed conveyor-belt offtake continued to keep sentiment soft.
Increased intake of high-cis isoprene rubber for new EV lines emerged as contradictory signals from OEMs in Shanghai and Guangzhou, as well as from firm export orders to North America and Southeast Asia. While these factors supported the price, they were unable to reverse the overall downward trend.
As per ChemAnalyst, with immediate-need purchasing holding sway and no infrastructure demand at hand, isoprene rubber prices may remain weaker over the next few weeks, but firm tire production and export activity may lend a price floor to prevent further declines, keeping the market cautiously watchful.
