Soaring feedstock BD, SBR may hamper Chinese tyre industry

03 August 2009 05:22  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Soaring feedstock butadiene (BD) and rising styrene butadiene rubber (SBR) prices may hamper the recovery of the Chinese tyre industry, which is facing growing protectionism from the US, a Chinese SBR producer said on Monday.

“Tyre makers in China are very concerned about growing protectionism in the US, and the continued price spikes in the feedstock BD and rising SBR prices will not do much good for the Chinese tyre industry,” a Chinese SBR producer said.

The feedstock BD price jumped by yuan (CNY) 700-800/tonne ($102-117/tonne) to CNY10,000-10,200/tonne ex-tank this week in the face of tightened supply from the unexpected two-month delay in the start-up of China’s Fujian Refining and Petrochemical’s new 120,000 tonne/year BD unit.

The new 120,000 tonne/year BD unit was initially due to commence commercial production in July, but has since been delayed to September.

This has prompted major Chinese SBR producers, such as Sinopec and PetroChina, to raise non-oil grade 1502 SBR offers by CNY 300/tonne to CNY 12,900-13,200/tonne ex-warehouse (EXWH) from 1 August.

“We expect the domestic non-oil grade 1502 SBR prices to rise further to CNY 14,000/tonne as we expect the BD price to go up further,” a Chinese trader said.

The feedstock BD domestic price in China has surged by CNY 2,000/tonne since early July, correspondingly lifting the non-oil grade 1502 SBR price by CNY 1,000-1,500/tonne in the same period.

SBR is the feedstock used in the manufacture of tyres.

The US International Trade Commission (ITC) ruled in favour of the United Steelworkers’ (USW) appeal to limit Chinese tyre imports into the US to ensure the survival of the US tyre manufacturing and the preservation of jobs.

The commission had recommended that a three-year duty be imposed on Chinese tyre imports. In particular, the commission proposed a 55% duty on the first year, 45% on the second and 35% on the third.

The USW had filed a petition on 20 April 2009 that sought a three-year import quota on Chinese tyres, saying that Chinese tyre imports rose from fewer than 15 million units in 2004 to over 46 million tyres in 2008.

Tyre dealers, however, say cheap Chinese tyre imports have flooded the market because of a decision by US tyre makers to focus on high-priced tier one tyres. 

($1 = €0.70/$1=CNY6.84)

For more on styrene butadiene rubber visit ICIS chemical intelligence 
To discuss issues facing the chemical industry go to ICIS connect

By: Helen Yan
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly