FocusAsia SBR may fall on influx of deep-sea cargoes, weak NR

13 July 2011 06:26  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Spot prices of styrene butadiene rubber (SBR) prices in Asia will likely weaken this week, given strong volumes of deep-sea cargoes heading into the region, and weakness in the natural rubber market, industry sources said on Wednesday.

Non-oil grade 1502 SBR was assessed at $4,300-4,400/tonne (€3,053-3,124/tonne) CFR (cost and freight) southeast (SE) Asia and at $4,250-4,350/tonne CFR India, on 6 July, according to ICIS.

SBR cargoes of Russian and South African origin, however, are available at lower prices of $4,200-4,250/tonne CFR SE Asia/India this week, market sources said.

“The availability of cheaper deep-sea Russian and South African cargoes is making it very tough for us to sell our material at $4,400/tonne CFR SE Asia as buyers are now asking for $4,200/tonne CFR SE Asia,” said an Asian SBR producer.

In India, selling offers were quoted at $4,300/tonne CFR India, said a tyre maker.

“But we cannot accept this price. Our buying idea is $4,000-4,100/tonne CFR India,” the SBR end-user added.

SBR is a raw material in the manufacture of tyres for the automotive sector.

The rubber market has turned generally bearish, with natural rubber prices also weak – just fluctuating in the $4,300-4,600/tonne range in the past month, market sources said.

“Tyre producers have been building up their NR inventories in recent weeks and I heard that some large tyre makers went into the market to buy NR when prices fell to around $4,300/tonne at the end of June,” a trader said.

With NR prices falling below $4,400/tonne, some traders offloaded their old SBR non-oil grade 1502 stocks at $4,300-4,350/tonne CFR (cost and freight) Asia in a bid to draw buyers forward, as the downstream tyre producers have been adopting a wait-and-see stance.

NR and SBR are raw material substitutes that go into tyre production, with their market prices tending to move in tandem.

“Sentiment is getting bearish, with all the macro-economic factors and concerns on the euro-zone debt contagion and the US fiscal deficit making the market nervous and jittery, so it is better to liquidate now,” another trader said.

Tyre makers are not keen to procure SBR 1502 now, anticipating prices to come off soon, traders said.

“We have covered our requirements until September and have no interest to procure any additional SBR 1502 spot cargo above $4,300/tonne CFR SE (southeast) Asia,” said a southeast Asia-based tyre producer.

($1 = €0.71)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
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