09 August 2011 06:49 [Source: ICIS news]
By Helen Yan
Heightened fears of another sharp slowdown in the world economy wiped out earlier hopes of a pick-up in SBR demand, they said.
Some SBR producers have revised offers for non-oil grade 1502 to $4,550-4,600/tonne (€3,185-3,220/tonne) CFR (cost and freight)
They were initially expecting spot material prices to rebound when offers were hiked to $4,700-4,800/tonne CFR Asia in early August since downstream tyre makers are due to replenish their dwindling stocks.
SBR is used in the manufacture of tyres for the automotive industry.
But with the global markets in turmoil and with US crude futures falling to $77/bbl on Tuesday, SBR traders and downstream tyre makers have retreated from the market and adopted a wait-and-see stance.
“The mood now is one of caution. Buyers will wait for a clearer direction and risk appetite will invariably be curbed, given the bearish sentiment and uncertain global market outlook,” a trader said.
“The market is so uncertain, so we will just wait and see. If the
Standard & Poor’s has downgraded the US’ credit ratings to “AA+” from “AAA” late last week even though the world’s biggest economy managed to avert a debt default at the last minute by raising its national debt ceiling via legislation.
The downgrade further heightened concerns over a possible recession in the
Export-oriented economies such as
“Spot offers for SBR non-oil grade 1502 above $4,500/tonne CFR Asia are not finding any takers as natural rubber prices are also falling,” a Chinese trader said.
Natural rubber (NR) and SBR are substitutes for each other in the production of tyres for the automotive industry and their prices tend to impact and move in tandem with each other.
NR physical prices have fallen to around $4,600/tonne, down about $150/tonne from early this month.
“NR prices are in a downtrend and we have revised our buying indications for August shipments of SBR 1502 down to $4,200-4,300/tonne CFR, “an Indian tyre producer said.
With prices of feedstock butadiene (BD) also on a decline, the downward pressure on SBR values is building up, industry sources said.
BD prices fell by $70/tonne week on week to $3,930-3,980/tonne
“We expect BD prices to fall further and drop to the low $3,000/tonne CFR levels in September or October, so we are expecting SBR prices to fall and drop below $4,000/tonne CFR by then,” another tyre maker said.
($1 = €0.70)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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