03 February 2012 02:48 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Styrene butadiene rubber (SBR) prices in Asia are poised to rise further in the first quarter because of soaring feedstock butadiene (BD) and natural rubber (NR) prices, industry sources said on Friday.
The feedstock BD prices have increased by about $400/tonne (€304/tonne) since early January to more than $3,500/tonne CFR (cost & freight) NE (northeast) Asia, traders said.
NR prices have increased to $3,800-3,900/tonne, up by $600/tonne in the past month following the Thai government’s announcement on 17 January that it plans to spend baht (Bt) 15bn ($486m) in the NR market as a price-intervention measure to boost prices to Bt120/kg.
Thailand is the world’s largest producer and exporter of NR, accounting for one-third of the global output.
To keep pace with the soaring feedstock BD costs and rising NR prices, spot offers for non-oil grade 1502 SBR rose by $100-150/tonne this week to $3,400-3,500/tonne CFR Asia.
NR and SBR are substitutes for each other in the production of tyres for the automotive industry and the price of one affects the price of the other.
“There is no way other but for the SBR producers to increase their prices because the feedstock BD costs have eroded our margins and the NR prices have gone up so much,” a SBR producer based in China said.
In the week ended 1 February, non-oil grade 1502 SBR prices were at $3,250-3,350/tonne CIF (cost, freight & insurance) China, up by $250/tonne since early January, according to ICIS.
The feedstock BD makes up about 70% of the SBR composition and production costs.
Downstream tyre makers in Asia are resisting a significant price hike as their tyre export sales have dropped because of the weak economies in Europe and the US, industry sources said.
Asia is a major tyre production centre for the global automotive market. SBR is a major raw material used in the production of tyres.
“Our tyre exports have fallen as the Europe and US automotive markets have not recovered from the downturn. It is difficult for us to accept a significant SBR price increase,” a downstream tyre producer said.
Other than eroded margins from high NR and feedstock BD costs, Asian SBR producers are also facing stiff competition from European SBR producers.
Competitively-priced SBR from Europe has been heading its way to Asia, in particular, to India.
“We can procure European material $200-300/tonne lower than Asian cargoes. We have covered our requirements until June and do not need to buy any SBR now,” an Indian tyre maker said.
($1 = €0.76, $1 = Bt30.86)
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