FocusSE Asia SBR prices may hit record $4,000/tonne in March

23 February 2011 04:15  [Source: ICIS news]

By Helen Yan

SBR goes into making of tyresSINGAPORE (ICIS)--Styrene butadiene rubber (SBR) prices may rise above $4,000/tonne (€2,920/tonne) in March - a record high - in southeast Asia and India if demand continues to exceed supply, SBR producers said on Wednesday.

March spot offers for non-oil grade 1502 SBR have increased to $4,000-4,050/tonne CFR (cost & freight) in southeast Asia and India following trade done at $3,900/tonne CFR in these countries. (please see graph below)

“SBR non-oil grade 1502 supply is really tight and demand very strong, that is the reason for the record-high price, the highest we have seen,” a Korean SBR producer said.

The highest record for non-oil grade 1502 was in July 2008 when prices hit $3,300/tonne CIF (cost, insurance & freight) in China, ICIS data showed.

“The downstream tyre producers have switched to using non-oil grade 1502 SBR in their formulations as the natural rubber price is too expensive, so demand for SBR has strengthened,” a SBR producer said.

Natural rubber (NR) and synthetic rubber are used in the production of tyres for the automotive industry and their prices tend to impact and move in tandem with each other, SBR producers said.

Natural rubber futures for April delivery at the Singapore Commodity Exchange surged by more than $300/tonne in the first two weeks to $5,750/tonne on 14 February although prices have fallen in recent days to around $5,480/tonne by the close of business on 22 February.

SBR non-oil grade 1502 prices have soared by $500/tonne since early February, when prices hovered around $3,400/tonne CFR SE Asia, according to ICIS.

“The price increase in SBR is in line with the recent surge in the natural rubber price,” a trader said.

However, if the natural rubber prices were to continue to decline, that would put a cap on the SBR price upswing, industry sources said.

The downstream tyre producers have raised their concerns over the soaring SBR prices.

“It is a partnership between SBR producers and tyre makers but if the SBR makers continue to make so much money while the tyre makers are losing money, it is not beneficial for long-term relationship,” an Indian tyre producer said.

($1 = €0.73)

For more information on SBR, 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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