30 April 2012 00:00 [Source: ICB]
Prices for styrene butadiene rubber (SBR) in Asia are expected to decline further this month and in May on oversupply from soft demand. Demand has been affected by a weak recovery in the US economy and a slowing down of China's economy.
SBR prices fell again in the week ended April 19 on the back of decreasing feedstock butadiene (BD) values and poor demand. Prices dropped from the week ended April 12 by yuan (CNY) 100-700/tonne ($16-111/tonne, €12-84/tonne) to a collective range of CNY23,000-24,100/tonne EXWH (ex-warehouse) all regions, as assessed by ICIS. Regional prices for oil-extended grade 1712 fell by CNY400-600/tonne to a range of CNY19,500-19,800/tonne EXWH all regions, as assessed by ICIS.
On the feedstock front, BD prices dropped from the week ended April 12 by CNY500/tonne to CNY24,000-24,500/tonne in the week ended April 19. Buying interest was limited, and the falling prices were said to be caused by ample stock in domestic Chinese BD traders' hands.
TIRE MANUFACTURERS WARY
Demand for SBR in the downstream tire sector has been subdued because tire producers have been unwilling to buy large volumes of material and are keeping their inventories lean in the face of the poor economic outlook.
Tire makers are said to be holding off their contract commitments and purchasing smaller lots on an as-needed basis.
SBR is a major feedstock for tire production in the automotive industry.
In the week ended April 19, major domestic SBR producer Sinopec cut its offers from CNY23,500-24,000/tonne to CNY22,800-23,500/tonne for non-oil grade SBR 1502, and from CNY20,000/tonne to CNY19,500/tonne for oil-extended SBR 1712.
Sinopec proposed these cuts as part of an effort to stimulate buying interest.
Some market players believe SBR prices might get a boost in May from a decrease in supply.
Major supplier Jinlin Petrochemical is planning to shut its 150,000 tonne/year SBR unit for maintenance starting mid-May. The maintenance is expected to last for longer than a month.
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