FocusChina SBR may rebound as supply tightens amid soaring BD

16 February 2012 06:41  [Source: ICIS news]

By Sunny Pan

SINGAPORE (ICIS)--Styrene butadiene rubber (SBR) prices in China may rebound on expectations of tight supply, as most producers choose to cut output amid a continued surge in the values of feedstock butadiene (BD), industry sources said on Thursday.

On 15 February, SBR prices were at CNY24,000-24,500/tonne ($3,810-3,889/tonne), down around CNY500/tonne week to week, according to Chemease, an ICIS service in China. Demand for the elastomer remains weak but is likely to improve towards March, industry sources said.

Meanwhile, SBR producers are being forced to cut output given current high production costs, largely on account of BD’s price upsurge.

Chinese SBR producers, including Qilu Petrochemical at Zibo in Shandong Province, Fuxiang Chemical at Quanzhou in Fujian province, Zhechen Rubber at Hangzhou in Zhejiang Province, have cut operating rates at their facilities.

The average run rate at SBR facilities in China is estimated at 83% currently, industry sources said.

“BD prices are higher than SBR and this is not sustainable. We have no choice but to keep low operation rate at our 50,000 tonne/year SBR plant at 67%,” said a company source at Zhechen Rubber.

BD prices are currently at CNY30,200-30,500/tonne EXWH (ex-warehouse) east China, while styrene monomer (SM) were at CNY10,100-10,200/tonne ex-tank Zhangjiagang, in the week ended 10 February,  according to Chemease, an ICIS service.

BD and SM are feedstocks used to make SBR, which goes into the manufacture of tyres for automobiles.

Spot BD offers in China have soared to a record high of CNY31,000/tonne EXWH east China this week, and are likely to continue rising given tight supply, industry sources said.

($1 = CNY6.30)

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

By: Sunny Pan

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