Butadiene is key challenge for rubber industry – Pirelli Tyre CEO

18 April 2012 16:55  [Source: ICIS news]

LONDON (ICIS)--The chief executive of Italy-headquartered manufacturer Pirelli Tyre on Wednesday listed butadiene (BD) as one of the main challenges the tyre industry is facing in a likely reference to growing pressure on profitability derived from the rising cost of raw materials.

“The key problem for the tyre industry is of course the issue about butadiene,” said Francesco Gori, chief executive of Pirelli Tyre.

Gori was the keynote speaker at the annual International Institute of Synthetic Rubber Producers (IISRP) conference, which is being held this week in Venice, Italy.

The “issue” he alluded to during his speech is a likely reference to the sharp increase in the price of BD, which is one of the main feedstocks of styrene butadiene rubber (SBR), a product companies like Pirelli mix with natural rubber to make tyres.

BD prices have risen steadily in recent years, lifted by limited supply in the US, which is increasingly relying on ethane as an olefins feedstock, and rising production costs in regions that use naphtha as a cracker feedstock.

BD is extracted from crude C4, which is produced mainly through the naphtha-cracking process.

US BD contract prices have soared by 55% in 2012 from December last year, while spot prices in Asia have more than doubled since November 2011.

The surge in recent months came as global BD supply has tightened amid a busy cracker maintenance season in the US and unplanned outages and production cutbacks in Asia and Europe.

The 53rd edition of the IISRP meeting opened on Monday. The conference ends on Thursday.

By: William Lemos
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