FocusAsia BR producers raise offers as feedstock BD prices soar

08 July 2011 03:31  [Source: ICIS news]

BR producers in Asia are raising their offers in line with soaring feedstock BD prices.By Helen Yan

SINGAPORE (ICIS)--Asia butadiene rubber (BR) prices are expected to rise in July and August as regional producers are raising their offers in line with soaring feedstock butadiene (BD) costs, industry sources said on Friday.

BR producers have increased their offers by more than $200/tonne (€140/tonne) to $4,800-5,000/tonne CFR (cost & freight) NE (northeast) Asia for spot shipments for July and August.

The producers said their margins have declined because of the surge in feedstock BD prices.

“We have no choice but to raise our offers to $4,800-5,000/tonne CFR as our margins are now negative because of the high raw material BD costs,” a South Korean BR producer said.

Feedstock BD prices have increased by $350/tonne since early June to $4,000-4,050/tonne CFR NE Asia on 1 July, according to ICIS.

Feedstock BD prices have doubled since January this year when prices were at around $2,050/tonne CFR NE Asia, ICIS data showed.

Several BR producers, including South Korea’s LG Chem and Korea Kumho Petrochemical Co (KKPC), Taiwan Synthetic Rubber Corp (TSRC) and China’s Shen Hua Chemical Industrial, are planning to reduce their operating rates or shut their plants for maintenance in July and August because of the persistent increase in feedstock BD prices.

“If the feedstock BD prices continue to rise, we may shut down our BR plant in August as we have no margins,” a second South Korean BR producer said.

The BR price hikes have caused buying resistance from downstream tyre producers, who have cut their BR requirements by using more natural rubber (NR) in their formulations.

“We will not buy BR [at] above $4,500/tonne as we can get NR at this price or lower,” a regional tyre producer said.

NR prices were fluctuating between $4,300-4,600/tonne in June, but are at around $4,500/tonne this week.

Several tyre producers have stocked up on their NR supply, purchasing the material when its prices were at around $4,300/tonne last week, market sources said.

NR and BR substitute one another in the manufacture of tyres in the automotive industry.

“We anticipate that the NR prices may fall further to around $4,000/tonne and we have revised our formulations to include more NR,” a tyre producer said.

($1 = €0.70)

For more on butadiene, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database

By: Helen Yan
+65 6780 4359

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