Synthetic rubber cost competitiveness wins over tyre makers - Erste

24 September 2010 17:03  [Source: ICIS news]

PRAGUE (ICIS)--Synthetic rubber producers are winning increasing orders from tyre manufacturers at the expense of natural rubber makers on better cost competitiveness, Erste bank said on Friday.

"The low price of synthetic rubber compared to natural rubber over the last couple of years has forced tyre producers to make the switch to synthetic rubber in 2010,“ it said.

"According to the latest trends in consumption patterns, the current ratio of consumption of natural rubber to synthetic rubber of 73:27 is likely to change to 70:30 in favour of synthetic rubber by the end of the current financial year," the bank said.

"This should assure solid demand for synthetic rubber in future years [and we therefore] expect synthetic rubber prices to remain high over the coming years,“ it added.

Droughts had hit Asian natural rubber harvests hard this year allowing synthetic rubber producrs such as Europe's second largest, Poland's Synthos, to capitalise on the supply squeeze with "spectacular profits", Erste said.

European producers of styrene butadiene rubber (SBR) would see their SBR/feedstock margin climb from €1,025/tonne ($1,363/tonne) in 2009 to €1,653/tonne in 2010, the bank forecast. The figure for 2011 would be €1,705, it also predicted.

($1 = €0.75)

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By: Will Conroy
+44 20 8652 3214



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