FocusAsia SBR prices set to fall further on weak Chinese demand

11 April 2012 05:17  [Source: ICIS news]

By Helen Yan

SBR goes into tyre makingSINGAPORE (ICIS)--Styrene butadiene rubber (SBR) prices are set to fall further in April and May as supply outstrips demand amid concerns over a weak US economic recovery and slowing Chinese economy, industry sources said.

Spot offers for non-oil grade 1502 SBR have dropped by about $100/tonne (€76/tonne) to $3,500/tonne CIF (cost, insurance & freight) China for fresh April and May shipments as producers reduced their prices to attract buyers.

Demand has remained subdued as the downstream tyre producers keep lean inventories and are unwilling to purchase large volumes in view of the poor economic outlook, industry sources said.

“The downstream tyre makers are holding off their contract commitments and buying smaller lots only on a need-to-basis,” an Asian SBR producer said.

Weak US job growth data and Chinese trade data have dampened sentiment.

The US is a major export market for tyre makers in China.

SBR is a major feedstock for tyre production for the automotive industry.

China's foreign trade posted a slower growth rate in March, and imports witnessed lower-than-expected growth, indicating weakening demand.

China's year-on year export growth slowed from 18.4 percent in February to 8.9 percent in March, according to statistics released on 10 April by the General Administration of Customs.

Imports saw a deeper slump, with growth slowing from 39.6 percent in February to 5.3 percent in March.

Apart from the weak demand, Asian SBR producers have been facing mounting competition from traders offloading their stocks-in-hand at competitive rates in Asia.

“We can procure cheaper product from traders and there is no pressure to lock in any purchases, we can wait,” a downstream tyre producer said.

Buying indications for fresh April and May shipments of non-oil grade 1502 SBR spot shipments have dropped to $3,300-3,350/tonne CIF China.

Non-oil grade 1502 SBR prices were assessed at $3,450-3,500/tonne CIF China in the week ended 4 April, down by $100/tonne since early March, ICIS data showed.

“It is a buyer’s market now and good time for buyers to press prices lower,” a supplier said.

“Market conditions are very tough and buyers are cautious and not in a hurry to lock in any purchases,” an Asian SBR producer said, adding that they may consider shutting down their SBR plant if market conditions do not improve.

($1 = €0.76)

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

By: Helen Yan
+65 6780 4359

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