By Ji Haiqing, Sublime China Information (SCI)

Continuous oversupply leads to more furious competition

With excellent oil resistance, high wear resistance, good heat resistance, strong adhesive strength, good water resistance and air tightness, NBR is widely used in the production of oil-resistant rubber products, oil-resistant washers, gaskets, sleeves, soft packaging, soft rubber tubes, printing and dyeing rubber rollers as well as cable rubber materials. It has become an essential elastic material for automobile, aviation, oil and printing industries.

   There are five NBR producers totally in China at present, namely Lanzhou Petrochemical (65 kt/a), Ningbo Shunze (65 kt/a), Zhenjiang Nantex (60 kt/a), ARLANXEO-TSRC (30 kt/a) and INSA GPRO (30 kt/a). At the same time, import volumes take up a certain portion, mainly originated from South Korea, Japan, and Russia. In 2019, the total import volume gained 5.40% year on year. NBR capacities are expected to increase further as the market enjoys a lucrative profit compared with other products in the industry. On September 17, 2019, Sinopec and SIBUR Holding OJSC signed a memorandum of understanding on the cooperation of NBR project in St. Petersburg, according to which, a new joint-venture NBR plant with a capacity of 50 kt/a will be built in China later. In addition, Lanzhou Petrochemical is scheduled to expand its capacity by 35 kt/a in 2020, and now the project is underway.

   On the demand front, the automobile industry, key derivative of NBR, contributes to more than half of the total NBR consumption. However, the automobile industry has snapped the previous-year increase. In 2019, the automobile production and sales were at 25.721 million and 25.769 million respectively, down by 7.5% and 8.2% year on year. The industry was greatly hit by the COVID-19 outbreak, and from January to March 2020, the production and sales were at 3.474 million and 3.672 million, down by 45.2% and 42.4% year on year respectively. Such decline in production and sales has affected the market trend of NBR to some extent. In the longer term, the domestic NBR competition will be more furious. 

A sharp price fall clouded the market 

   China's NBR market was largely on a decline through 2019. The downtrend extended into 2020. The virus has restricted the domestic consumption and thus lowered the NBR prices further. In addition, prices of some low-end products have even dropped to about RMB10 000/t. However, the market outlook is bearish and prices are expected to fall continuously for a certain period, with possibilities of hitting new lows. On the contrary, prices of some high-end products, such as hydrogenated nitrile rubber, largely remained firm.

To develop high-end products in the future

   A big amount of high-end products, such as hydrogenated NBR and carboxylated NBR, are imported to meet domestic demand every year. At the same time, in terms of the stability of product quality, some domestic NBR products are not as good as imported products, which leads many downstream producers to choose higher-priced imported products.

   Some domestic producers have been developing high-end products in recent years, such as Shanghai-based Zannan and Yantai Longkou-based DAWN. Their capacity of hydrogenated NBR will reach 5 kt/a in 2020. Before that, China mainly imported hydrogenated NBR from Germany’s Arancico and Japan’s Zeon, at a price of RMB220-240/kg. The prices of domestically-made hydrogenated NBR are much lower at RMB160-180/kg.

   Firstly, for the industrial development in the future, domestic NBR producers should make great efforts to develop green products and develop technologies so as to improve performance of the products. They should actively develop other brands as well as special NBR products with unique performance and high added value in a bid to meet market needs and industrial development trend. Secondly, domestic producers should upgrade more series of high-end products, accelerate the development and research of NBR blending modification, as well as expand the application fields. The development of higher-end products is not only a breakthrough for the domestic market, but also a great improvement in the competitiveness in the global market.