UpdateAsia synthetic rubber producers hike prices on supply

11 January 2011 09:54  [Source: ICIS news]

(Adds comment from tyre makers in paragraphs 11, 12)

SBR and BR are used in manufacturing tyresSINGAPORE (ICIS)--Two major Asian synthetic rubber producers' upcoming plant shutdowns have spurred suppliers to increase prices by $200-300/tonne (€154-231/tonne) this week, industry sources said on Tuesday.

South Korea’s LG Chem would shut down all its synthetic rubber units at Daesan in mid-March for maintenance, said a company source.

The producer will take its 135,000 tonne/year styrene butadiene rubber (SBR) and 55,000 tonne/year nitrile rubber (NBR) plants off line for three weeks, while its 100,000 tonne/year butadiene rubber (BR) plant will be shut for four weeks, the source added.

“We are now building up inventories and have no spot cargo,” said the source.

Taiwan’s TSRC Corp would later begin a month-long turnaround at its 100,000 tonne/year styrene butadiene rubber (SBR) plant at Kaohsiung, Taiwan, in April.

Market players told ICIS the prices of SBR and BR have been under upward pressure since the fourth quarter of 2010 because of tight supply.

Non-oil grade SBR 1502 prices have surged by $600/tonne since early October 2010 to $3,000-3,100/tonne CIF (cost, freight & insurance) China in January this year, ICIS data showed.

BR prices have soared by $1,000/tonne since early October last year to $3,700-3,800/tonne CFR (cost & freight) northeast Asia in January.

The upcoming turnarounds have spurred some suppliers to increase their prices by a further $200-300/tonne this week, said players.

Spot offers for BR were raised to $3,900-4,000/tonne CFR Asia, while those of non-oil grade 1502 SBR have surged to $3,300-3,400/tonne CFR Asia.

Downstream tyre makers said the unabated price hikes could dampen demand and prompt some tyre makers to cut operating rates

"It will be difficult to continue to absorb rising raw material costs as we cannot keep raising tyre prices," a medium-sized tyre manufacturer said. "If the prices continue to rise we may not have any choice but to cut the operating rate."

Traders said spot business for both products remained scant amid limited supply.

“Although the spot prices have soared, the deals done are very scarce because of limited supply,” said a trader.

Some synthetic rubber producers have cautioned against the relentless price hikes, saying the downstream tyre makers could start to cut their operating rates and demand may collapse if SBR and BR values were to continue to rise unabated.

“We understand the concerns of the downstream tyre producers and our main priority is to supply our long-term contract customers,” a South Korean synthetic rubber producer said.

Meanwhile, spot prices of NBR remained stable at $3,050-3,150/tonne CFR Asia, according to ICIS data.

($1 = €0.77)

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For more on styrene butadiene rubber, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
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