US SBR spot prices may climb on production costs, exports to China

02 December 2010 22:27  [Source: ICIS news]

HOUSTON (ICIS)--December US styrene butadiene rubber (SBR) spot prices could climb as much as 3-5 cents/lb ($66-110/tonne, €50-84/tonne) because of increasing production costs and export opportunities to China, a producer and a trader said on Thursday.

Buyers were not immediately available for comment. However, it was expected that there would be some buyer resistance in the US because domestic demand was considered light to moderate.

Production costs were driven up by continued strength in natural rubber prices and by a rise in chief feedstock butadiene (BD), which climbed 2 cents/lb in December to settle at 86 cents/lb.

US tyre producers use natural rubber in their auto and truck tyre compounds, can adjust the percentage of natural rubber within certain tolerances. However, because of high natural rubber prices in 2010, producers use only the minimum amount of natural rubber necessary to retain the performance characteristics of their tyres.

However, a rise in production costs was not the only reason for raising prices, a producer said. Strong SBR demand and high prices in China were presenting US SBR sellers with arbitrage opportunities if domestic buyers balked at higher spot prices, the producer noted.

“Right now, prices in China are about $1.30/lb, so unless we can push spot numbers up in the US, it doesn’t make sense not look at export markets,” the producer said.

ICIS-assessed non-oil grade 1502 SBR spot prices averaged just over $1.29 cents/lb CIF (cost, insurance and freight) China, while in the US, spot prices for 1502 material at the end of November were 107.00-113.00 cents/lb FOB (free on board) US Gulf (USG).

North American SBR suppliers include include Goodyear, International Specialty Products (ISP), Lion Copolymer and Negromex.

($1 = €0.76)

For more on SBR, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect

By: Gene Lockard
1 713 525 2653

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