Product profile: SBR

31 March 2003 00:00  [Source: ICB]

The industry continues to suffer from poor profitability, particularly in the emulsion sector, but any restructuring moves look unlikely in the short term

Uses

Styrene-butadiene rubber (SBR) is the most widely used synthetic rubber. About 70% of all SBR produced in Europe and North America is used in the manufacture of car tyres. It is also used in industrial hose, footwear, construction and as a coating resin. It is available in different grades: 1500 and 1712 is used mainly in tyres, while 1205 is used for footwear and industrial applications.

Supply/demand

Consumption in western Europe saw growth of 5% in 2002 compared with 2001, says CMAI, while production edged up by 0.6% on 2001. Exports last year were 124 000 tonne, while imports reached 191 000 tonne.

Demand is fairly stable, but supply is being impacted by the shortness of butadiene feedstock. A series of maintenance turnarounds on butadiene extraction units in the next two months will cut available capacity further and SBR producers could be entering quarter two (Q2) with announcements of allocation. Very high feedstock prices in Asia and the US have reduced exports to Europe with only occasional volumes coming in. Solution grade SBR continues to make inroads into emulsion markets and players also report a switch from emulsion to lower-priced natural rubber. Polimeri Europa's elastomers business is for sale but with no takers so far.

Pricing

Producers managed to raise prices in quarter one on the back of higher butadiene and styrene feedstock costs. Contract numbers are pegged at E900-970/tonne and E810-880/tonne FD NWE for 1500 and 1712 respectively. Spot numbers in early March were around E900-920/tonne FD for 1500 and E810-830/tonne FD for 1712. Negotiations for Q2 contracts are under way with producers seeking to achieve a minimum E100/ tonne increase on both grades to try and recoup some margin. Margins for emulsion business are mostly negative and at historical lows but are healthier for solution.

Technology

SBR is produced by the copolymerisation of butadiene with styrene in the approximate proportion of 3:1 by weight. In the emulsion process, the feedstocks are suspended in a large proportion of water in the presence of an initiator or a catalyst and a stabiliser.

A solution process is also employed, where the copolymerisation proceeds in a hydro-carbon solution in the presence of an organometallic complex. These are usually performed as continuous processes. Some manufacturing facilities have swing capacity with polybutadiene rubber. Process modifications can produce higher performance polymers and companies are using these to develop premium products.

Health and safety

Contact with SBR may irritate the skin. Inhalation of vapours during processing may be harmful and irritate the eyes and respiratory tract, while dust may cause respiratory irritation or sensitisation. SBR can ignite spontaneously if temperatures exceed 300¡C, and toxic gases will form upon burning.

Outlook

Average annual demand growth in western Europe is forecast by CMAI at just 1.1% for the period 2002-07, while production is expected to rise by about 1.9%/year. Consumption in central Europe is expected to climb by 2-3%/year.

Demand for emulsion will remain in decline. Solution will see continued growth and, in the longer term, current capacity will not be enough to meet demand. However, no-one is willing to invest right now as the industry is in urgent need of restructuring and consolidation to return to health. Both SBR suppliers and tyre producers are rethinking their strategy but businesses are currently an unattractive proposition for potential buyers.

Global demand growth will average 2.8%/year for 2002-07, says CMAI, while capacity will rise by just 0.5%/year. Asia is the high growth region, particularly China where continuing mechanisation and demand for tyres will see the country become a big importer of SBR. Players believe demand growth in China will reach double digit figures over the next five years.

European SBR capacity, '000 tonne/year

Company	Location	Capacity
Emulsion SBR
Bayer	La Wantzenau, France	55
Dow	Schkopau, Germany	108
	Pernis, Netherlands	90
Dwory	Oswiecim, Poland	130
FSK Elemir	Zrenjanin, Serbia	45
Kaucuk	Kralupy, Czech Republic	75
Lukoil	Burgas, Bulgaria	35
Petro Borzesti	Borzesti, Romania	150
Polimeri Europa	Hythe, UK	75
	Ravenna, Italy	120
Solution SBR
Atofina	Antwerp, Belgium	25
Bayer	Port Jerome, France	29
Dow	Schkopau, Germany	60
Dynasol	Santander, Spain	30
Michelin	Bassens, France	40
Polimeri Europa
	Grangemouth, UK	30
	Ravenna, Italy*	10
* currently producing SBS
Source: CMAI/ECN

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