15 July 2010 12:09 [Source: ICIS news]
PRAGUE (ICIS news)--Erste Bank has upgraded its rating of shares in Poland-based Synthos, Europe’s second-largest synthetic rubber producer, from “hold” to “accumulate”, citing a positive development in the company’s product/feedstock margin, it said on Thursday.
“It seems 2010 should be a superb year for the synthetic butadiene rubber segment,” Erste analyst Tomasz Kasowicz wrote in a research note.
Erste forecast the product/feedstock margin in 2010 for the Synthos Dwory business at €414/tonne ($524/tonne), compared with the previous margin of €321/tonne.
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“The strong development of synthetic rubber prices year on year, combined with the skyrocketing butadiene price and almost flat ethyl-benzene price, has resulted in a year-on-year synthetic rubber product/feedstock margin explosion,” said Kasowicz.
Strong demand for synthetic butadiene rubber had partly been driven by a drought in
The synthetic butadiene rubber production volume at Synthos Dwory in the first five months of 2010 reached 66,300 tonnes, posting year-on-year growth of 28%, he said.
“We forecast that, for the full year of 2010, the Synthos group will sell 222,000 tonnes of rubber”, with capacity utilisation at 95%, he said.
Prices of natural rubber reached $4,000/tonne by July, the highest in 56 years, according to Erste. In contrast, compared with last year, the synthetic butadiene rubber price grew by more than twofold by July, reaching €1,850/tonne, it added.
“After many months of solid growth in [synthetic butadiene rubber] prices, we think that the price growth potential is exhausted,” concluded Kasowicz.
“Therefore, we expect a price correction in synthetic rubber in [the second quarter of 2010]. However, we do not expect synthetic rubber prices to drop too much; they should remain high, due to the strong butadiene market.
“Shortages of butadiene in
The completion of a new 80,000 tonne/year polybutadiene rubber plant, scheduled for early 2011, should support Synthos’ future profits, as new products such as high-performance neodymium-polybutadiene rubber for tyres were added to its portfolio, Kasowicz added.
($1 = €0.79)
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