US SBR producers agree with 3-cent hike for Oct BD settlement

24 September 2009 22:02  [Source: ICIS news]

HOUSTON (ICIS new)--US styrene-butadiene rubber (SBR) producers generally agreed that the lowest  increase proposal of 3 cents/lb for the October butadiene (BD) settlement was “about right”, sources said on Thursday.

One producer said it was expecting 2-5 cent/lb ($44-110/tonne, €30-75/tonne) increases, and was surprised when ExxonMobil and LyondellBasell nominated 10- and 12-cent increases respectively, the producer said.

“The [3-cent/lb] nomination from TPC [Texas Petrochemical] reflects the actual facts of the market,” the producer said, adding that there was still another nomination to be heard.

LyondellBasell confirmed its nomination and other market sources reported the Texas Petrochemical and ExxonMobil proposals.

Supply of BD, the main feedstock of SBR, is tight amid a lack of crude C4, sources said. BD sellers have raised prices considerably since April, putting pressure on SBR producers who had to raise values at a time when demand was thin.

While some SBR producers said they would likely seek a 3-cent/lb increase in October if BD settles up 3 cents/lb, another increase in SBR prices would not be a sure thing, said a consultant with one of the producers.

“Analysts say auto demand in September has really fallen since the cash for clunkers programme expired,” the consultant said. “That has hurt tyre and SBR demand. Producers will try to build their margins by moving up 3 cents with BD, but I don’t know if buyers will go along.”

An increase of 3 cents/lb in BD values would put the October settlement at 68 cents/lb, compared with the April BD settlement of 25 cents/lb, when prices began to rise.

SBR prices have risen along with BD, with August values for 1502 non-oil grade SBR at 82-87 cents/lb FOB (free on board) USG (US Gulf), and 1712 oil-extended grade SBR at 74-79 cents/lb FOB USG, according to global chemical market intelligence service ICIS pricing.

September SBR prices are expected to rise another 3-4 cents/lb, sources said. SBR prices were from the mid-50s to the mid-60s cents/lb FOB USG in June, according to ICIS pricing, before entering the recent period of steep increases.

SBR producers include Goodyear, International Specialty Products (ISP), Lion Copolymer and Negromex.

($1 = €0.68)

For more on styrene-butadiene rubber visit ICIS chemical intelligence
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By: Gene Lockard
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