BD hikes, modest demand could mean rocky Q2 for US SBR sellers

17 March 2010 22:14  [Source: ICIS news]

HOUSTON (ICIS news)-- US styrene butadiene rubber (SBR) producers predicted modest demand growth and quickly rising feedstock costs that will necessitate price increases in the second quarter of the year.

SBR production costs are closely tied to feedstock butadiene (BD) prices, which are expected to continue growing in the second quarter amid tight supply.

“We think BD prices are going up a chunk in April, and if they do, SBR prices will follow,” a producer said.

Previously, SBR participants said the BD settlement price was likely to rise by 10 cents/lb in April, which would generate an SBR price-hike proposal of at least 8 cents/lb.

The issue for SBR producers will be selling buyers on higher prices amid demand growth that is expected to be modest, a supplier said.

The Rubber Manufacturers Association (RMA) recently revised its 2010 forecast based on final 2009 figures showing year-on-year tyre shipments declined 8% in 2009 from 2008 figures.

There could be an increase in shipments of 7M tyres in 2010, compared with 2009 figures, resulting in a year-on-year gain of 3%, according to the RMA.

“SBR producers will have to pass through price increases to cover rising feedstock costs or face narrowing margins,” a source said.

Non-oil grade 1502 SBR prices for February were 93-96 cents/lb ($2,050-2,116/tonne, €1,497-1,545/tonne), while oil extended grade 1712 SBR prices were 85-89 cents/lb, according to global chemical market intelligence service ICIS pricing.

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

($1 = €0.73)

For more on SBR and BD visit ICIS chemical intelligence
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By: Gene Lockard
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