FocusImported SBR puts US producers in a squeeze

12 August 2010 22:31  [Source: ICIS news]

US SBR producers feel squeezeBy Gene Lockard

HOUSTON (ICIS)--US styrene butadiene rubber (SBR) producers are having an increasingly difficult time competing with imported product due to a wide spread between feedstock prices, producers said on Thursday.

US non-oil grade 1502 SBR spot prices in early August were 115.50-123 cents/lb ($2,546-2,712/tonne or €1,986-2,115/tonne) FOB (free on board) US Gulf, while in China, 1502 spot material was 91-93 cents/lb CIF (cost, insurance and freight) China.

“Buyers tell us they would like to buy from domestic sellers, and they would if the differential was 2-3 cents/lb. When they can buy imported SBR for 10-12 cents/lb less, though, the differential is too great. It becomes a business decision,” an SBR producer said.

Tight supply due to a lack of crude C4 was said to have produced the high butadiene (BD) prices in the US.

The BD August settlement in the US was 94 cents/lb, about the same as US spot prices in early August.

BD spot prices in China were 73-75 cents/lb CFR (cost and freight) NE Asia and SE Asia, 19-21 cents/lb less than the US price.

US SBR producers said they would not be able to compete with other regions until there was more parity in BD prices.

“We don’t have enough margin to be able to drop our prices enough to be competitive,” another BD producer said. “As long as the spread in BD costs is that great, there’s nothing we can do.”

While industry sources report ample supply of BD in Asia, a lack of crude C4 has kept supply in the US tight. Additionally, a mechanical breakdown has caused US BD producer TPC Group to put its customers on allocation at 85%, sources said on Thursday.

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

($1 = €0.78)

For more on SBR visit ICIS chemical intelligence
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By: Gene Lockard
1 713 525 2653

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