16 September 2010 06:14 [Source: ICIS news]
By Helen Yan
Spot prices of SBR spiked in recent months, largely tracking the surge in values of natural rubber - a substitute material for tyre production. The price direction in last three months of the year was largely uncertain, they said.
“Some tyre makers do not wish to lock in on a quarterly basis due to uncertainty over the fourth-quarter market outlook. They wish to settle October contracts first and then talk about November and December contract settlements later,” said an SBR producer.
Some October contracts for SBR non-oil grade 1502 had been settled at $2,150-2,200/tonne (€1,656-1,694/tonne) CFR (cost and freight) Southeast (SE)
Spot cargoes of SBR non-oil grade 1502 were being sold at $2,200-2,250/tonne CFR SE Asia this week, up $200/tonne from early August, according to data from ICIS.
Some expectations that natural rubber prices may come off in the fourth quarter after spiralling upward in the past month prompted a number of tyre producers to rush settling October SBR contracts, market sources said.
“It will not be surprising that some Chinese tyre producers would also go for monthly contracts as the natural rubber and SBR prices have gone up too sharply in recent weeks and there are obviously risks involved if they lock in on a quarterly basis,” said a major tyre producer in China.
Chinese domestic non-oil grade 1502 prices have soared more than yuan (CNY) 2,500/tonne ($371/tonne) since late July to hit CNY 18,500/tonne ex-warehouse (EXWH) earlier this month.
“Chinese tyre makers are uncertain what will happen in November and are only purchasing enough to cover October requirements,” a Chinese SBR producer said.
Meanwhile, SBR producers welcomed this break in the traditional quarterly contract settlement, expecting prices to move up further in November, market sources said.
SBR producers were seeking higher prices for November contracts in a bid to recover margins they lost in the third quarter, industry sources said.
The margins of SBR producers were severely eroded by escalating costs of feedstock butadiene (BD) in the third quarter. BD prices surged by about 10% or $200/tonne since late March to more than $2,200/tonne CFR NE (northeast) Asia in May, wiping out the margins of the SBR producers.
“We plan to recover our margins in the fourth as the third quarter was very weak and we lost our margins,” said an SBR producer.
The major regional SBR producers include LG Chem, Korea Kumho Petrochemical Co (KKPC), BST Elastomers and Shen Hua Chemicals, while the key tyre producers include Goodyear, Bridgestone, Toyo Tires, Continental Tires and Michelin.
($1 = €0.77 ; $1 = CNY6.74)
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