09 February 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European February styrene butadiene rubber (SBR) contract prices increased by €100-300/tonne ($137-411/tonne) from January because of rising feedstock costs, strong demand and tight supply, sources said on Wednesday.
February 1500 grade contract prices were assessed at €2,200-2,300/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.
February 1723 grade was priced at €2,000-2,200/tonne FD NWE, and 1783 grade at €1,950-2,150/tonne FD NWE, according to ICIS.
Tight supply was the result of strong exports to Asia, caused by high prices in that region. Margins for product sold into Asia were €300-400/tonne above product sold into Europe, players said. All spare molecules were being sold into Asia, meaning that consumers were struggling to source additional volumes and European spot cargoes were rare.
Difficulties in sourcing feedstock butadiene (BD) were further tightening supply. The February BD contract price increased by €100/tonne from January. The February styrene free carrier (FCA) Rotterdam contract price increased €105/tonne from January, adding further upward pressure on SBR prices.
High consumption was driven by shipments of finished goods to Asia. Natural rubber shortages in Asia were fuelling buying interest, coupled with GDP and upwards social mobility in China raising local automotive demand. Further boosting Asian consumption, the end of the Chinese Lunar New Year had seen a sharp increase in requests as local buyers looked to restock.
SBR was being used as an alternative for natural rubber in Asia because of the limited availability and high prices of the latter. SBR is commonly substituted for natural rubber in Asia, but technical restrictions on European tyre production limit substitution options to around 5% of applications.
($1 = €0.73)
Additional reporting by Truong Mellor and Nel Weddle
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