FocusAsian synthetic rubber makers to cut op rates on BD surge

09 December 2009 05:37  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Several major Asian synthetic rubber producers are planning to further cut operating rates if butadiene (BD) feedstock prices continue to soar, they said on Wednesday.

BD prices have surged by more than $200/tonne in the past month, with offers now at $1,600-1,650/tonne (€1,072-1,106/tonne) CFR (cost and freight) northeast (NE) Asia.

A spread of about $400/tonne is required for SBR producers to post any margins. SBR offers are now around $1,800-1,850/tonne CFR Asia, according to global chemical market intelligence service, ICIS pricing.

Synthetic rubber producers in Taiwan, China and South Korea have voiced their intention to reduce operating rates of their styrene butadiene rubber (SBR) and butadiene rubber (BR) plants after their margins have been wiped out by escalating BD prices.

"We have cut the operating rates of our SBR plant to 70% and our BR plant to 90% as our margins have been eroded,” a company source at TSRC Corp of Taiwan said.

TSRC runs a 100,000 tonne/year SBR plant and a 55,000 tonne/year BR plant in Kaohsiung, Taiwan.

Major synthetic rubber producer, Korea Kumho Petrochemical Co (KKPC), has also said that it would further cut operating rates of its SBR and BR plants by another 10-20% to 60-70% if BD prices were to rise further.

"We cannot accept BD prices higher than $1,500/tonne CFR NE Asia or our margins will be wiped out,” a company source at KKPC said.

KKPC runs a 480,000 tonne/year SBR plant in Ulsan and a 222,000 tonne/year BR plant in Yeosu in South Korea.

However, news that Chinese producer Maoming Petrochemical will shut down its 100,000 tonne/year No 2 BD plant for more than 40 days from 26 December has fuelled buying interest from traders.

Traders have snapped up BD spot cargoes at $1,550-1,600/tonne CFR NE Asia, driving prices further upwards.

"There is a lot of speculative interest from traders as they anticipate BD and SBR prices to rise further in January,” a trader said.

"If prices rise so quickly and sharply, we also expect prices to drop quickly when Tianjin Petrochemical starts up its new 150,000 tonne/year BD plant in January,” said a company source at Shen Hua Chemicals in Nantong, China.

Major synthetic rubber producers in Asia include TSRC Corp of Taiwan, Shen Hua Chemicals of China and Korea Kumho Petrochemical Co (KKPC) of South Korea.

($1 = €0.67)

For more on butadiene 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