FocusAsia BR may fall further as NR, BD prices on downslide

11 November 2011 05:39  [Source: ICIS news]

By Helen Yan

SINGAPORE (ASIA)--Spot butadiene rubber (BR) prices in Asia may continue to nosedive after shedding about $1,000/tonne (€740/tonne) from early October, tracking the decline in values of natural rubber (NR) and feedstock butadiene (BD), industry sources said on Friday.

BR prices fell below $3,000/tonne this week, and were assessed at $2,800-3,000/tonne CFR (cost and freight) northeast (NE) Asia on 10 November, according to ICIS data.

“There is still room for the BR prices to drop further to around $2,700/tonne if the NR and BD prices continue to fall,” an industry source said.

NR and BR are raw material substitutes in the production of tyres for automobiles, and their prices tend to move in the same direction.

On Thursday, NR prices slumped by more than $600/tonne from the start of the month, falling below $3,200/tonne, according to the Malaysian Rubber Board.

Asian prices of BD, the feedstock for BR production, meanwhile, plummeted by about $900/tonne from early October to around $1,550/tonne CFR NE Asia on 4 November, according to ICIS data.

In the domestic Chinese market, spot BR values fell by more than yuan (CNY) 9,000 over the past month to around CNY 22,000 this week, market sources said.

Weak demand given worries over the ongoing eurozone debt crisis and the floodings in Thailand also contributes to the slumping BR prices, market sources said.

“BR prices have been falling sharply mainly because of the feedstock BD price, but demand has also remained weak as the downstream tyre makers are adopting a cautious stance and most are buying on a hand-to-mouth basis, given the global market uncertainty,” a trader said.

Asian economies, including China and Thailand, are mostly export-oriented and count Europe as a major market for many finished products, including tyres.

China and Thailand are the major production centres in Asia of global vehicle manufacturers and tyre makers.

In Thailand, severe flooding had prompted major tyre makers, including Toyota, Honda, Goodyear and Bridgestone, to halt production at their plants in the southeast Asian country.

($1 = €0.74)

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

By: Helen Yan
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