NBR Demand Up   

By Wang Yuying  

1  Output decreased in 2006

By the end of 2006 the capacity of to make NBR (acrylonitrile-butadiene rubber) in China was still maintained at 49.5 thousand t/a, but the output was only 35 thousand tons in 2006, a drop of 9.9% from 2005. The output in the two units of CNPC Lanzhou Petrochemical Company Ltd. was 18.3 thousand tons in 2006 and the output in Zhenjiang Nantex Chemical Co., Ltd. was 16.7 thousand tons. The NBR unit of CNPC Jilin Petrochemical Company Ltd. already made no production for 4 consecutive years.
   CNPC Lanzhou Petrochemical Company Ltd. reported in 2005 that it would construct a new 50 thousand t/a NBR unit, but due to factors in overall planning and market demand, the plan has made no substantial progress. It is expected that the production capacity of NBR in China will still have no change in 2007.
   On June 15th, 2007 NBR units in CNPC Lanzhou Petrochemical Company Ltd. started overhaul for 15-20 days. The company had a low inventory of NBR during the overhaul and made high-load production after the completion of the overhaul. The NBR unit in Zhenjiang Nantex Chemical Co., Ltd. is making normal operation, product sales are smooth, the inventory has been low and there is no overhaul plan in 2007. CNPC Jilin Petrochemical Company Ltd. has no plan for NBR production in 2007. It is therefore expected that the output of NBR in China will be 35 thousand-38 thousand tons in 2007.

2   Consumption growth slowdown

Nearly 50% of NBR in China is used in the production of various automobile components. It also has applications in electric wires/cables, adhesives, oil-resistant printing boards, printing rollers and cases. NBR can be blended with other materials into various modified elastomers. Such blends have extensive applications in products with requirements on resistance to oil, ozone and corrosion
   The apparent consumption of NBR in China was 114.5 thousand tons in 2006, an increase of 1.5% over 2005 but the growth was around 26 percentage points lower. It is expected that the demand for NBR in China will still have a stable increase in 2007 and reach around 120 thousand tons.

3   Stable price rise

China's NBR price had some fluctuations in 2006. The annual average price was RMB22 950 per ton, an increase of 1.8% over 2005. The highest price of RMB24 450 per ton appeared in June 2006 and the lowest price of RMB21 500 per ton appeared in October 2006. The price difference in the whole year was RMB2 950 per ton.
   Fluctuations of the NBR price in 2006 were influenced by the cost of upstream raw materials, the NBR price in the international market and the change of the market supply.
   Lanxess of Germany announced to increase its worldwide NBR price from January 1st, 2007. The NBR price has therefore increased constantly in 2007 and the transaction price in the domestic market already rose to RMB25 800 per ton in June 2007.
   CNPC Lanzhou Petrochemical Company Ltd. and Zhenjiang Nantex Chemical Co., Ltd. have already made an upward readjustment to their ex-work prices of NBR. Due to the rise of the ex-work price and the price rise in the international market, the market transaction price of NBR has also increased. It is expected that the transaction price of NBR in China will still have a stable increase in near future.

4   Small import growth

The imported amount of NBR in China reached 81.9 thousand tons in 2006, an increase of 7.1% over 2005 and accounting for 71% of the apparent consumption. Import sources mainly include Russia, Japan, Korea, France and Taiwan province. Russia is the largest NBR supplier to China and the amount of NBR imported from Russia accounted for 27.0% of the total.
     It is expected that the growth of NBR capacity in China will be slow and imports will still hold more than two thirds of the domestic market share in the next few years.

Table 1  NBR Production in China in 2006
               (thousand t/a, thousand tons)
Producer                Capacity    Output
CNPC Jilin Petrochemical Co.    10.0    0.0
CNPC Lanzhou Petrochemical Co.    19.5    18.3
Zhenjiang Nantex Chemical Co.    20.0    16.7
Total                            49.5    35.0
Source: CNCIC

Table 2 Supply and Consumption of NBR in China
         in Recent Years  (thousand tons)
Year                    2002    2003    2004    2005    2006
Output                    7.4       13.0    15.4    38.8    35.0
Import                   55.4    71.8    76.4    76.5    81.9
Export                   0.2       1.5       3.5        2.4       2.4
Apparent consumption    62.6    83.3    88.3    112.9    114.5
Proportion of output    11.8    15.6    17.4    34.4    30.6
in apparent consumption (%)    
Source: CNCIC