03 September 2009 04:18 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS news)--Tyre makers in Asia are bracing themselves for a tough battle with styrene butadiene rubber (SBR) producers who have proposed a massive 60% hike for fourth-quarter (Q4) contracts, tyre manufacturers said on Thursday.
Fourth-quarter contract negotiations are expected to start next week.
Major SBR producers in Asia have proposed a hefty $800-900/tonne (€560-630/tonne) hike to $2,100-2,300/tonne CFR (cost and freight) ?xml:namespace>
Third-quarter non-oil grade 1502 SBR contracts were settled in June at $1,300-1,400/tonne CFR Asia.
“We expect the feedstock BD to hit $2,000/tonne in Q4 and we have no choice but to increase our Q4 SBR contract offers to $2,300/tonne or we will have no margins. It is as simple as that,” a South Korean SBR producer said.
The downstream tyre producers have strongly opposed the huge fourth-quarter SBR price hike, saying that such a massive increase was unreasonable and was detrimental to the tyre industry, which had been hard hit by the global automotive downturn.
“All major tyre producers lost money in the first half of this year and we are trying to build up our business in the second half of this year, and this kind of huge Q4 SBR price increase is not helpful to the industry,” a major international tyre producer said.
“This 60% Q4 SBR price hike is crazy, as any price hike more than 30% is unworkable given the current global downturn,” a Chinese tyre producer said.
“It is not reasonable and the SBR makers are resorting to this tactic of trying to build up this fear factor that the feedstock BD will hit $2,000/tonne to justify their huge Q4 SBR contract price hikes,” another major tyre maker said.
The feedstock BD soared above $1,600/tonne CFR NE (northeast)
Some industry players had anticipated that the feedstock BD price could hit $2,000/tonne CFR NE Asia in the fourth quarter, given the prevailing global tightness.
A severe hurricane season in the US Gulf in October and November could further disrupt supply and drive BD prices higher.
“We cannot rule out the possibility that the feedstock BD may hit $2,000/tonne in Q4 and we have to factor this in for the Q4 SBR contract negotiations,” a Japanese SBR maker said.
($1 = €0.70)
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