FocusChina SBR to halt declines on better demand, BD rebound

19 March 2012 06:03  [Source: ICIS news]

By Sunny Pan

SINGAPORE (ICIS)--China’s styrene butadiene rubber (SBR) prices may soon stop falling on the back of improving demand and amid a rebound in spot values of feedstock butadiene (BD), market sources said on Monday.

Domestic spot SBR prices in China have shed between 3.6-4.2% since the start of the month because of weak buying sentiment from traders, as well as from downstream tyre and shoe manufacturers.

Prices were assessed at CNY23,700-24,200/tonne ($3,750-3,829/tonne) for non-oil grade SBR 1502, and at CNY20,300-20,500/tonne for oil-extended grade SBR 1712 on 16 March, according to Chemease, an ICIS service in China.

Hoping to stimulate buying interest, major domestic SBR supplier Sinopec had cut its SBR offer on 15 March  by CNY800/tonne to CNY24,000/tonne for non-oil grade SBR 1502 and to CNY20,200/tonne for oil-extended grade SBR 1712, market sources said.

SBR demand should improve as tyre production - the major downstream for the material - is expected to increase towards April. Tyre makers are expected to replenish SBR stocks to beef up output, an industry source said.

Among domestic producers in China, Shenhua Chemical has plans to raise run rates at its 180,000 tonne/year SBR plant to 100% in early April from 85% currently, said a company source.

Chinese tyre makers are currently running their facilities at an average run rate of 70-80%, up from around 70% in the month of February, industry sources said.

Rebounding BD prices would provide firm support to SBR prices, they said.

BD is quoted at around CNY26,000-26,500/tonne on Monday, up by CNY1,000/tonne from last week, with most market players expecting supply to tighten once downstream synthetic rubber plants ramp up production, market sources said.

Among those that raised production is Gaoqiao Petrochemical, which raised operating rates at its 120,000 tonne/year butadiene rubber (BR) plant to 100% on 9 March from 50% previously.

Spot domestic BD prices in China have fallen by as much as 16.8% from mid-February to CNY25,500-26,000/tonne EXW (ex-warehouse) east China in mid-March because of production cuts at downstream BR and SBR makers, according to Chemease data.

Most market players in China currently have high-priced BD cargoes in hand, and are holding out for higher prices before selling.

Liaoning Huajin Chemical and Bluestar (Tianjin) Chemical have increased their BD offers  on 16 March by CNY300/tonne to CNY25,800/tonne and to CNY26,200/tonne, respectively, as they expect supply to be tight in April.

With BD prices currently at CNY26,000/tonne, SBR must at least be priced at CNY25,300/tonne, industry sources said.

Styrene monomer (SM), another major raw material for SBR production, was assessed at CNY10,580-10,700/tonne ex-tank Jiangsu province, according to Chemease.

($1 = CNY6.32)

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

By: Sunny Pan

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