EPCA ’11: Weaker US tyre demand puts brakes on BD

02 October 2011 10:11  [Source: ICIS news]

BERLIN (ICIS)--A drop in tyre demand in the US during the second half of 2011 was one of the factors that helped end a sharp uptrend in butadiene (BD) prices in recent months, a tyre producer said on Sunday.

Tyre demand rose in the first six months of the year, but the market has been down by 5–10% since July, the source said on the sidelines of the 45th annual European Petrochemical Association (EPCA) meeting.

The downturn in the second half is likely to erase gains for the previous six months and leave the replacement market flat for the year, the producer said, adding that replacement tyres account for 80% of the market.

The tyre industry is a major consumer of styrene butadiene rubber (SBR), which in turn is one of the main downstream markets for BD.

US BD prices rose exponentially in the first eight months of 2011, but contract prices dipped by 3% in September amid an unseasonal slowdown in the SBR market.

SBR demand softened in September, while slowdowns do not usually happen until the fourth quarter of the year, according to an SBR producer.

Demand in September 2011 was weaker than it was in September 2008, the source said, referring to the start of the global financial crisis that year and the ensuing impact on chemicals demand, including BD.

US BD contracts fell by 30 cents/lb in October to $1.40/lb ($3,086/tonne, €2,315/tonne)in the second drop for the monthly contract in as many months.

The outlook for November remained weak, a buyer said, predicting the US contract would either settle flat or drop by another 5 cents/lb next month.

($1 = €0.75)

For more on butadiene visit ICIS chemical intelligence

By: William Lemos
+1 713 525 2653

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