China SBR prices hit record high on tight supply, strong demand

30 May 2011 06:52  [Source: ICIS news]

The prices of SBR in China have hit record highs on strong demand, but suppliers are unable to produce sufficient stock. By Amber Liu

SHANGHAI (ICIS)--China’s styrene butadiene rubber (SBR) prices have hit historical highs and are expected to increase further by the middle of June because of tight supply and strong demand, industry sources said on Monday.

The prices of SBR non-oil grade 1502 surged by yuan (CNY) 1,300-1,500/tonne ($200-231/tonne) to CNY29,000-29,150/tonne EXWH (ex-warehouse) in east China on 27 May, according to data from Chemease, an ICIS service in China.

The prices of SBR oil-extended grade 1712 was up by CNY800-1,000/tonne to CNY24,700-25,000/tonne EXWH in east China in the last two weeks, the data showed.

The prices of the two grades of SBR soared by CNY4,300/tonne and CNY3,800/tonne respectively, compared with those published in the middle of March, according to Chemease. 

Lanzhou Petrochemical, a subsidiary of PetroChina and a major producer of SBR in China, has been unable to produce enough material to meet the high demand and this has caused a shortage in supply in the mainstream sales sector, industry sources said.

This is because the company has only restarted its 100,000 tonne/year non-oil SBR unit on 9 May, after completing its unplanned maintenance on 17 April, a source from Lanzhou Petrochemical said.

The initial cargoes from the plant are transported to buyers in northwest and southwest China, while the remainder is transported to buyers in the country’s eastern, southern and northern regions, industry sources said.

Major downstream producers of car radial tyres have begun operating their plants at full rates to meet the demand of the traditional peak season in the domestic market which began in April, the sources added.

“We have been receiving a number of orders from downstream sectors, but it is hard to meet the demand because of insufficient inventories,” an SBR trader in east China said.

Sinopec has raised its offers for non-oil grade 1502 by CNY700/tonne to CNY28,000/tonne DEL (delivered) on around 20 May, a source from Sinopec said. The company increased its offers for oil-extended grade 1712 by CNY700/tonne to CNY24,100-24,200/tonne DEL on around 20 May, the source added.

PetroChina is following Sinopec’s price measures, but its offers are on an EXWH basis, a source from PetroChina said.

The prices of butadiene (BD), a key feedstock for SBR, increased by around 50% on 1 January to the current mainstream price of CNY23,000/tonne ex-tank, applying upward pressure to prices of SBR, according to Chemease.

However, market participants said that there will likely be an oversupply of SBR when the downstream peak demand season ends in late June.

($1 = CNY6.49)

Additional reporting by Amanda Zhang
For more on styrene butadiene rubber, please visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Amber Liu
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