FocusChina SBR imports to drop, exports to rise on new capacities

21 June 2011 07:22  [Source: ICIS news]

By Sunny Pan

SBR is used in the manufacture of tyresSHANGHAI (ICIS)--China’s imports of styrene butadiene rubber (SBR) are expected to decline further and exports are likely to increase because of new domestic capacities that have come on stream since late 2010, market sources said on Tuesday.

An estimated 450,000 tonnes/year of new capacity will be added to the existing 1.05m tonnes/year of SBR production in China by the end of 2011, according to the data from Chemease, an ICIS service in China.

Demand, on the other hand, is strong but is not expected to keep pace with the growth in capacity as the country consumed an estimated 390,000 tonnes of SBR in January-April 2011, according to Chemease.

The country’s annual domestic demand for SBR is estimated to be at around 1m tonnes in 2011.

Market sources said as import volumes decline, SBR exporters that relied on sales to China will have to look for other markets in the region.

“We had to channel cargoes to other more lucrative markets since early March this year, including the US, southeast Asia, Japan and India,” said a trader in South Korea.

South Korea and Japan, which are the top two sellers of SBR to China, exported 33,951 tonnes and 12,915 tonnes of the product to China in January-April 2011, according to data from China Customs.

China’s import volumes have declined by around 26% to 102,000 tonnes in January-April 2011, as compared with the same period a year earlier, according to the data from Chemease.

The country exported a total of 105,200 tonnes of SBR in 2010, according to China Customs.

In comparison, SBR exports from China in January-April 2011 have already exceeded 40,900 tonnes, according to the data from Chemease.

“The shrinking imports and rising exports will not leverage SBR prices in the coming month, but it is hard to say in the long term,” said a major producer in China.

The prices of SBR non-oil grade 1502 surged by yuan (CNY) 2,800-3,400/tonne ($433-526/tonne) month on month to CNY31,000-31,800/tonne EXWH (ex-warehouse) in eastern China on 20 June, ICIS data showed.

However, market sources said it is too soon to predict what impact the changing dynamics of SBR imports and exports will have on domestic prices.

“We are unable to estimate the price trend [of SBR], but imports are expected to slide further,” the producer added.

The new domestic capacities include Hangzhou Zhechen Rubber’s 50,000 tonne/year SBR plant, which was started up on 25 November last year.

Tianjin Lugang Petroleum and Rubber began operations at its new 100,000 tonne/year SBR plant in northern China in late March.

PetroChina’s Fushun Petrochemical is building a new 150,000 tonne/year SBR plant in Liaoning province, northern China, and plans to start it up by the end of this year, a company official said.

SBR is used as a raw material in the production of tyres for the automotive industry, which accounts for 68% of its consumption in the domestic market.

More than 18m vehicles were sold in China in 2010. The country overtook the US in 2009 to become the world's biggest producer and consumer of vehicles.

Additional reporting by Amanda Zhang and Aboubakr Bajeddoub

($1 = CNY6.47)

For more on styrene butadiene rubber, visit ICIS chemical intelligence
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By: Sunny Pan

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