20 April 2012 07:05 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Asia’s butadiene rubber (BR) prices have shed 4% from mid-March and look set to fall further given waning demand from downstream tyremakers, with car sales tapering off amid the global economic slowdown, industry sources said on Friday.
Spot prices were assessed at $3,650-3,750/tonne (€2,774-2,850/tonne) CFR (cost, freight and insurance) northeast (NE) ?xml:namespace>
Production for automotive tyres – the main downstream for BR – have been cut in view of the poor global market outlook and a slowing Chinese economy.
Total vehicle sales in
Auto sales in the world's second biggest economy have been slowing down since last year after the government has rolled back incentives, and some of its cities imposed tough restrictions on car numbers to ease chronic traffic congestion and pollution.
“We have no orders for BR for the past two months and have several thousand tonnes of stocks to clear,” a trader said.
Falling natural rubber prices also exerted downward pressure on BR prices.
SMR 20 natural rubber (NR) prices fell below $3,600/tonne this week at the Malaysian Rubber Exchange, down by about $150/tonne since early April.
NR and BR substitute each other in tyre production, and their prices tend to move in tandem.
Asian BR makers said they do not expect the market to improve significantly this year, as the key
The Chinese government has revised down its GDP growth target to 7.5% this year from an 8% target that was kept for seven years, as exports growth is slowing down. Most countries in Asia rely on exports as an engine of growth and
In March, the country’s overall exports grew at more moderate pace of 8.9% from 18.4% in February, official data showed. Imports, on the other hand, grew at only 5.3% in March compared with 39.6% in February.
“The warehouses in
In view of the poor demand and in a bid to stem the price decline, several BR producers are cutting production.
“The downstream tyre makers are running at 50-60% of their capacities as demand for tyres has fallen sharply,” a Chinese BR producer said.
Several BR producers including Kumho Petrochemical (KKPC), LG Chem, TSRC and Sinopec Shanghai Gaoqiao have reduced their operating rates.
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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