Europe SBR April contracts up €150–200/tonne on supply and demand

06 April 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European styrene butadiene rubber (SBR) April contract prices increased by €150–200/tonne ($215–285/tonne) on all grades from March because of higher feedstock costs, strong demand and tight supply, sources confirmed on Wednesday.

SBR 1500 grade April contracts settled at €2,650–2,700/tonne, while 1723 grade settled at €2,450–2,600/tonne and 1783 grade settled at €2,400–2,550/tonne. All prices were agreed on a free delivered (FD) northwest Europe (NWE) basis.

The rise in SBR contract prices followed a €135/tonne increase in the upstream butadiene (BD) April contract price, the main feedstock for SBR.

Low availability is the result of difficulties in sourcing BD, which is limiting operating rates at SBR plants. BD is globally short and SBR players are predicting the market will remain extremely tight for at least the next two months.

Several buyers said availability was now more important than pricing and to secure volumes they had put up little resistance to sellers’ April SBR price targets.

Strong SBR demand is being driven by offtake from the tyre market in Europe and Asia. Rising tyre demand in Europe is predominantly coming from the replacement market, on the back of improving macro-economic conditions.

Asian consumption is being fuelled by GDP growth and upwards social mobility in China. This is coupled with a shortage of natural rubber and its high prices have led to SBR being used as an alternative in Asia. In Europe, technical restrictions limit substitution of SBR for natural rubber to about 5% of applications, but in Asia it is common.

Coupled with this, buying interest from the US for European material is firming because of spiking US BD costs, pushing up US SBR values and making overseas material competitive.


For more on SBR, visit ICIS chemical intelligence

By: Mark Victory
+44 208 652 3214

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