FocusAsia BR market shrugs off Thai BST Elastomers' force majeure

09 May 2012 07:10  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Offers for butadiene rubber (BR) in Asia have stayed at $3,500-3,600/tonne (€2,695-2,772/tonne) on Wednesday, largely unaffected by a reduction in regional supply from the shutdown of a Thai facility that could last six months, market sources said.

BST Elastomers (BSTE) has announced a force majeure on BR supply, as its 55,000/tonne facility in Map Ta Phut, Thailand, was severely damaged by an explosion and fire that occurred at the site on 5 May.

“There is no significant impact at the moment on the market and we will wait and see,” a northeast Asian BR producer said.

BR prices may even continue to fall because of weak demand, market sources said.

In the week ended 2 May, spot BR prices were assessed at $3,500-3,550/tonne CFR (cost and freight) southeast (SE) Asia, down by $250/tonne from early April, according to ICIS.

“BSTE’s BR capacity is small, so the shutdown will not have a great impact on the supply situation,” a northeast Asian BR producer said.

BR is used as raw material for the production of tyres for the automotive industry.

Demand for the synthetic rubber is not expected to pick up anytime soon, with growth in vehicle sales significantly moderating globally.

China – the world’s leading car market – recorded contraction in auto sales in the first quarter. Total vehicle sales in China fell 3.4% year-on-year in the first three months of 2102, according to the China Association of Automobile Manufacturers. In 2011, the country’s nationwide auto sales rose just 2.5%, a sharp deceleration from an increase of more than 32% in 2010, official data showed.

Downstream tyre producers are pressing for lower BR prices given a bearish global market outlook.

Buying indications for fresh BR shipments have dropped to $3,200-3,300/tonne CFR SE Asia, market sources said.

A number of downstream tyre makers have cut back production and are not very keen to secure additional spot BR, having covered their requirements till the end of June, industry sources said.

($1 = €0.77)

By: Helen Yan
+65 6780 4359

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