FocusTyre makers opt for spot Asia SBR, cut Q4 contract volumes

07 October 2009 05:50  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--More tyre producers are growing keen to procure styrene butadiene rubber (SBR) cargoes from the Asian spot market, whittling down their fourth-quarter (Q4) contract volumes, as prices of the material continued to fall, industry sources said on Wednesday.

The combined effect of plunging values of feedstock butadiene (BD) and the US’ decision to impose punitive tariffs on Chinese tyre imports has depressed SBR values and may continue exerting pressure on prices, they added.

“For those who have settled (their Q4 contracts), they have reduced contract volumes and opted for more spot purchases,” said an SBR producer said.

SBR is a raw material for tyre production.

Prices of SBR feedstock - BD - have plunged by more than $200/tonne to below $1,450/tonne (€986/tonne) CFR (cost and freight) northeast (NE) Asia in the past month, based on data from global chemical market intelligence service, ICIS pricing.

Consequently, non-oil grade 1502 SBR spot offers have fallen to $1,900-1,950/tonne CFR Asia, down by more than $100/tonne from early September, based on the same data.

Declines in SBR prices have stonewalled negotiations for Q4 contracts, industry sources said.

“We have sufficient inventories to cover October requirements and will wait until November to start discussions on the Q4 SBR contracts as we expect prices to fall further,” a tyre producer said.

Chinese tyre makers, meanwhile, have started trimming production on expectations that US demand would plummet, with the extra punitive tariffs on US imports of China-made tyres now in place, industry sources said.

The extra tariff – 35% on the first year of implementation – took effect on 26 September 2009. The tariff rates will decline to 30% on the second year and further drop to 25% on the third year.

“The US decision to impose hefty tariffs on Chinese tyre imports has a ripple effect on the market,” said an SBR producer.

“Some major tyre producers are adopting a wait-and-see stance and have delayed Q4 contracts settlement,” he added.

Major tyre makers include Michelin, Goodyear, Bridgestone, Yokohama Tires, Continental and Kumho Tires.

Major SBR producers include Korea Kumho Petrochemical Co (KKPC), LG Chem, TSRC, BST Elastomers, Shenhua Chemicals, Zeon and JSRC.

($1 = €0.68)

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