FocusChina SBR rebound fizzles out on weak downstream demand

29 November 2011 05:01  [Source: ICIS news]

By Sunny Pan

SINGAPORE (ICIS)--Spot prices of styrene butadiene rubber (SBR) in China weakened after two weeks of sharp increases, as domestic demand is still poor and cannot sustain the gains, industry sources said on Tuesday.

Non-oil grade 1502 SBR prices fell by yuan (CNY) 400-700/tonne ($63-110/tonne) on 28 November to CNY21,500-22,000/tonne EXWH (ex-warehouse) east China, and to CNY18,000-18,100/tonne EXWH east China for oil-extended grade 1712 SBR, according to Chemease, an ICIS service in China.

Prices retreated after rising by more than CNY3,400/tonne or 17.9% from 11 November, the data showed.

The strong gains in recent weeks were propelled by traders’ restocking activity, as well as the spikes in values of feedstock butadiene (BD).

“The SBR price rebound has fizzled out as demand from the downstream tyre makers is not strong enough to support its rebound,” an industry source said.

China’s automobile and tyre manufacturers – the major downstream sectors for SBR – have trimmed production, sources said.

Tyre manufacturing facilities in China are running at 80%, market sources said.

An influx of imported material into China, meanwhile, has been augmenting the country’s supply, capping the gains in domestic SBR prices, market sources said.

“There are plenty of SBR imports arriving in China in November which are cheaper than the current prices, so it will be difficult for the traders to push up domestic prices further,” an industry source said.

Volumes of imported cargoes coming into China this month are higher compared with October, with some heard settled at CNY19,500-21,000/tonne for non-oil grade 1502 SBR, which is 7.4% lower than the current domestic prices, market sources said.

Additional reporting by Helen Yan

($1 = CNY6.39)

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

By: Sunny Pan

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