03 March 2011 03:29 [Source: ICIS news]
SINGAPORE (ICIS)--Asia’s styrene butadiene rubber (SBR) producers are proposing a massive increase of $1,000/tonne (€720/tonne) for Q2 contracts, industry sources said.
SBR producers have proposed Q2 contract offers for non-oil grade 1502 at $3,800-4,100/tonne CFR (cost & freight) Asia, up 30-40% over Q1 contracts.
Q1 contracts for non-oil grade 1502 were settled in a wide range at $2,600-3,000/tonne CFR Asia, depending on the time of settlement, cargo size, and terms and conditions, SBR producers said.
“SBR supply is really tight and with the feedstock butadiene (BD) likely to soar in the second quarter, we really have no choice but to raise the Q2 SBR contract offers up by a significant amount,” an SBR producer said.
However, the downstream tyre producers are up in arms against the price hike.
“This kind of huge price hike is not healthy for the tyre industry in the long run,” a major tyre producer said.
“Several tyre companies are in the red as they are unable to absorb the rising raw material costs. Another big SBR price increase will only push tyre makers to cut operating rates and destroy demand in the long run,” he added.
However, the SBR producers say that they may face a margin squeeze in the second quarter as they anticipate that the feedstock BD may climb up to $3,000/tonne in the second quarter.
BD prices were assessed at $2,450-2,500/tonne CFR NE (northeast) Asia by the close of business on 25 February, ICIS data showed.
“We have to factor in that the feedstock BD price may surge to more than $3,000/tonne in the second quarter which will severely erode our margins,” another SBR producer said.
Demand for BD is expected to outstrip supply during this period as several new SBR and butadiene rubber (BR) plants are expected to come on stream at the same time that several crackers are scheduled to shut.
In China, Tianjin Lugang Petroleum and Rubber is scheduled to start up its 100,000 tonne/year SBR plant at the end of March, while another Chinese producer, Fuxiang Chemicals, is slated to start up its 100,000 tonne/year SBR and 50,000 tonne/year BR plants in April in Fujian.
Meanwhile, Asia’s largest BR producer, Kumho Petrochemical Co (KKPC) started up its new 120,000 tonne/year BR plant in early March, while another South Korean producer, LG Chem is expected to add an 80,000 tonne/year BR line in May.
“We expect Q2 SBR contract negotiations to be tough and difficult, but such a huge price hike is not acceptable,” a tyre producer said.
($1 = €0.72)
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