29 May 2008 11:50 [Source: ICIS news]
SHANGHAI (ICIS news)--China-based tyre producer Chengshan Group may have to reduce its operating rate if feedstock prices keep rising, a company source said on Thursday.
"We will consider reducing the operation rate if feedstock costs continue to increase while demand is not strong," he added.
"Prices of feedstock such as styrene butadiene rubber (SBR) and butadiene rubber (BR) have hit record highs, squeezing margins substantially. I think feedstock prices should reduce by a half from the present levels before we call them rational and normal," the source said.
Some tyre makers in Asia were heard to have cut operation rates by 5% due to high SBR and BR values, traders said.
Prices of BR soared by yuan(CNY)7,300/tonne ($1,052/tonne) year on year to CNY23,600/tonne ex-warehouse(EXWH) east China, while SBR(non-oil grade 1502) increased by CNY7,500/tonne to CNY23,000/tonne EXWH east China, traders said.
The company is located in Rongcheng city, in the eastern Chinese province of Shandong.
Helen Yan, Amy Tong contributed to this article
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