FocusAsia SBR may fall further in July on low demand, weak BD values

01 July 2010 07:31  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Prices of styrene butadiene rubber (SBR) in Asia face increasing downward pressure in July on slowing Chinese demand and falling values of feedstock butadiene (BD), industry sources said on Thursday.

The current slump in demand from China - a major SBR importer - had forced some Asian producers to slash prices just to make a sale, sources said.

“The Chinese SBR market is very weak now and it is very difficult to find customers to accept our import prices unless we drop prices to compete with the domestic prices,” an SBR producer said.

Chinese domestic non-oil grade 1502 prices had plunged more than yuan (CNY) 3,000/tonne ($439/tonne) since mid April to CNY 15,200-15,500/tonne ex-warehouse (EXWH) this week according to ICIS.

To stimulate buying, some SBR producers recently slashed prices for non-oil grade 1502 to $1,900-1,950/tonne (€1,558-1,599/tonne) CIF (cost, insurance and freight) China, down around $100/tonne from a month ago, sources said.

Downstream tyre producers had, meanwhile, cut back on their SBR quarterly contract volumes due to the continued decline in values of feedstock BD, the producer said.

Several derivative tyre makers were opting for smaller SBR spot parcels on a monthly basis instead of committing to larger quarterly contract volumes, expecting BD price to decline further, the source added.

“We are cutting down our third quarter contract volumes, and instead buying smaller SBR parcels on a monthly spot basis," a downstream Indian tyre producer said.

BD has fallen to around $1,900/tonne CFR (cost and freight) northeast (NE) Asia, down more than $150/tonne since late May, according to ICIS.

SBR production requires around 65-70% BD, while styrene monomer constitutes the remaining 30-35%.

More than 300,000 tonnes of new supply could put further downward pressure on BD in July and force SBR values to slide down further, sources said.

Energy major Shell started up its new 155,000 tonne/year BD extraction unit in Singapore in May while China’s Zhenhai Refining and Chemicals Co (ZRCC) started commercial production of its new 165,000 tonne/year BD unit in June.

Major SBR producers include Korea Kumho Petrochemical Co (KKPC), LG Chem, TSRC, Zeon and JSR. Major tyre producers include Goodyear, Bridgestone, Michelin and Continental.

($1 = €0.82/ $1 = CNY6.83)

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By: Helen Yan
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