04 May 2011 16:41 [Source: ICIS news]
By: Helen Yan
Non-oil grade 1502 SBR prices in Asia have doubled since August last year, increasing by a staggering $2,000/tonne, driven by a combination of factors including strong demand from the automotive sector, tight supply and soaring natural rubber (NR) prices.
By the end of April, non-oil grade 1502 SBR prices had shot to near $4,000/tonne (€2,680/tonne) CIF (cost, insurance and freight) China, according to ICIS data.
Non-oil grade 1502 SBR is the most actively traded grade of synthetic rubber and widely used in tyre and footwear manufacturer.
But, have SBR prices peaked? And will they tumble in the third quarter?
A key concern is that China’s tightened monetary policy will dampen sentiment and slow down SBR demand in Asia. In such circumstances, can the automotive industry in China keep up its sizzling pace of growth?
Total auto sales rose 32% in 2010 to 18.1m vehicles, following growth of 46% in 2009, according to the China Association of Automobile Manufacturers (CAAM).
Chinese auto-makers have forecast that car sales in
The broad market slowdown in
Not suprisingly, SBR producers in Asia are keeping a close watch on
Indeed, the Chinese government’s monetary policy of incessantly raising interest rates to combat inflation has started to bite.
It has raised interest rates four times in the past six months and rumours of another interest rate hike in May has sent shivers down traders’ spines.
“It is getting more and more difficult to get credit and trades will only slow down further if there is another interest rate increase,” one Chinese trader said.
Chinese SBR imports fell 20% in the first quarter of 2011, compared with the same period last year, as it has become more difficult for businesses to borrow money.
Falling natural rubber prices is another factor that may exert further downward pressure on the SBR price. NR prices futures have fallen by $700/tonne during the past month.
The products are interchangeable in the tyre market with manufacturers adjusting formulations to take one product or the other as prices and avalability change. NR and SBR prices tend to move in tandem and impact each other.
NR futures for September delivery at the Singapore Commodity Exchange fell to about $4,500/tonne in late April, from around $5,200/tonne in the early part of the month.
“Natural rubber prices have fallen sharply and are likely to continue falling. So we expect to see a corresponding correction in SBR prices soon,” one tyre producer said.
($1 = €0.67, CNY6.50)
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