Chemical Profile - SB RUBBER

10 June 2002 00:00  [Source: ICB Americas]

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SB RUBBER     June 10, 2002

US PRODUCER	CAPACITY*
American Synthetic Rubber, (S) Louisville, Ky.	20,000
Ameripol-Synpol, (E) Odessa, Tex.	95,000
Ameripol-Synpol, (E) Port Neches, Tex.	335,000
Bayer, (S) Orange, Tex.	75,000
Bridgestone/Firestone, (S) Lake Charles, La.	180,000
DSM Copolymer, (E) Baton Rouge, La.	150,000
Goodyear, (E) Houston, Tex.	240,000
Goodyear, (S) Beaumont, Tex.	70,000
Subtotal: Emulsion-polymerized solid rubber (E) Solution-polymerized solid rubber (S)	820,000 345,000
Total	1,165,000

*Metric tons per year of emulsion (E) and solution (S) polymerized solid styrene-butadiene rubber (SBR). Capacity figures are for net dry rubber, including rubber hydrocarbon and extender oils, but not carbon black. Commercial production is by copolymerization of butadiene and styrene using emulsion or solution processes. Some facilities have multipurpose swing capacities and significant production may be captive material. In August 2000, Goodyear expanded S-SBR capacity in Beaumont, Tex., from 20,000 to 70,000 metric tons. The following year in April, Goodyear announced it would lower the E-SBR capacity at its Houston plant by about 45,000 metric tons because of reduced demand, especially from the tire segment. Profile last published 2/28/00; this revision, 6/10/02.

DEMAND
2000: 798,000 metric tons; 2001: 795,000 metric tons; 2005: 850,000 metric tons. Demand equals production plus imports, which were 177,000 metric tons in 2000 and 170,000 metric tons in 2001, less exports, which were 239,000 metric tons in 2000 and 195,000 metric tons in 2001.

GROWTH
Historical (1996-2001): negative 0.8 percent per year; Future: 1.6 percent per year through 2003.

PRICE
Historical (1996-2001): High, 45 cents per pound, market, SBR Type 1712 (cold, dry, oil extended) f.o.b. works; low, 40 cents, same basis. Current: 40 cents, same basis. List price is currently 69 cents per pound. Solution SBR sells at a 1 to 3 cent-per-pound premium over emulsion SBR for tire grades and 5 to 10 cents per pound for specialty grades.

USES
Tires and tire products, including tread rubber, 76 percent; mechanical goods, 15 percent; automotive, 5 percent; miscellaneous, including adhesives, floor tile and shoe soles, 4 percent.

STRENGTH
SBR is the largest-volume synthetic rubber claiming 40 percent of synthetic rubber consumption in all applications. This share has declined from 55 percent over the past two decades as radial tires, which use less SBR, replaced biased belted tires and new, non-tire applications were found for other synthetic rubbers. The conversion from biased to radial tires is now essentially complete, and this negative growth influence is no longer a factor. SBR's superior abrasion resistance and favorable cost/performance balance versus polybutadiene and natural rubber, assure that it will continue to be used in large volume for production of tires and tire products. Non-tire automotive uses are growing, particularly in replacement parts since the driving life of the average passenger car continues to increase.

WEAKNESS
SBR producers are facing a difficult time. The Asian and Brazilian economic downturn four years ago dealt a blow to tire industry demand, making an oversupplied SBR market even worse. Prices of both emulsion-grade and solution-grade SBR declined during the past year to about 40 cents per pound. The problem is worse for emulsion-grade product, which is being substituted with solution-grade by tire makers. The increasing use of solution-grade SBR by tire manufacturers, which consume 76 percent of all SBR, has led to emulsion-grade overcapacity. Low natural rubber prices in the market and partial substitution have also depressed SBR prices.

OUTLOOK
Technology is driving the tire polymers market. Innovations in the tire industry, including better traction, lower rolling resistance, longer wear, and run-flat capability, are pressuring elastomer suppliers to improve their products. The annual rate of increase for tire elastomers should return to a more moderate growth of 1.7 percent annually, with SBR solid growing at a 1.6 annual percentage rate to 2005, according to the Rubber Manufacturers Association. Further breaking down SBR solid, solution SBR is expected to increase at an annual average rate of 4.9 percent while emulsion SBR is expected to remain flat.

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