Synthetic Rubber Capacity Surplus

China's economy is predicted to maintain fast growth in 2012, which will promote Chinese rubber products industry's demand for synthetic rubbers to grow fast, an expert from China Rubber Industry Association commented. But he warned that overcapacity of Chinese synthetic rubber will worsen this year.
In 2011, seven new companies entered China's synthetic rubber producers list, adding 8 new production facilities and 570 000 t/a of capacity, making China's total capacity of synthetic rubbers reach 3.39 million t/a. This expert disclosed that China produced 2.66 million tons of synthetic rubber (excluding synthetic rubber latex) in 2011, representing a year on year growth of 10.6%. The capacity utilization rate of styrene-butadiene rubber (SBR), polybutadiene rubber (BR), styrene-butadiene-styrene elastomers (SBS) and nitrile-butadiene rubber (NBR) units was 88%, 79.5%, 68% and 59% respectively.
In 2011 China's apparent consumption of synthetic rubber amounted to 3.82 million tons, an increase of 2.3% annualized, compared with the annualized increase of 11.9% in 2010. The market shares of domestically made SBR increased by 4 percentage points to 85%, that of BR rose by 4.1 percentage points to 78%, that of NBR growing by 12 percentage points to 56%, and butyl rubber adding 12 percentage points to 27%. Due to rapid expansion of SBS, China's SBS production capacity has reached 820 000 t/a, causing imports of SBS to drop sharply by around 40% and exports to increase by four times. SBS is the first rubber suffering overcapacity in China.
Supply tight of butadiene had serious impact on the operating rates of domestic synthetic rubber facilities. China produced 2.08 million tons of butadiene in 2011, an increase of 100 000 tons or 4.9% over 2010. The production growth of butadiene in 2010 was 37% over 2009.
Worldwide, feedstock of ethylene tends to lighter, which will lead to less supply of butadiene. Some Chinese synthetic rubber producers are seeking other ways to produce butadiene instead of relying on the naphtha to ethylene crackers. Cost increase is inevitable. In China, many synthetic rubber projects are being constructed, which is expected to add 700 000 t/a capacity in 2012. Supply deficit of butadiene will be worsened and the capacity utilization rate of synthetic rubber plants will go down further.