FocusAsia SBR falls 7%; may extend declines on ample supply

10 May 2012 07:03  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) prices in Asia have shed about 7% this week and may remain on a downtrend this month, as supply continues to outstrip demand, industry sources said on Thursday.

A shutdown at BST Elastomers’ 75,000 tonne/year SBR plant in Map Ta Phut, Thailand, on 5 May has failed to elicit a reaction from the market, given ample supply and poor market conditions.

SBR buying indications from tyre makers are at below $3,000/tonne (€2,310/tonne) CIF (cost, insurance and freight) China for fresh May and June shipments, with some bids heard at $2,800-2,900/tonne CIF China, market sources said.

In the week ended 9 May, spot SBR prices were assessed at $3,000-3,100/tonne CIF China, down by $200-250/tonne from the previous week, according to ICIS.

BSTE’s SBR plant is expected to be down for two months, as the facility sustained severe damage from the explosion and fire that directly hit its BR plant in Map Ta Phut on 5 May.

But the resulting loss of supply is minimal on a regional scale, industry players said.

BSTE’s SBR output is mainly for the domestic market although some portion of it is exported to Southeast Asia and China.
 “The BSTE’s SBR capacity is too small to have any significant impact on pricing,” an SBR producer said.

Market sentiment is turning increasingly bearish given ongoing concerns over the eurozone debt crisis, the fragile US economy and China’s slowdown.

“Buying sentiment is very bearish and customers are not under pressure to secure any spot material as there is ample supply,” a trader said.

Crashing butadiene (BD) prices, as well as falling natural rubber (BR) values, are also exerting strong downward pressure on the SBR market, industry sources said.

BD is used as raw material for SBR, which in turn is used in the production of tyres for the automotive industry.

Spot BD prices have tumbled by $1,000/tonne, or about 29%, since early April to $2,450-2,500/tonne CFR (cost and freight) northeast (NE) Asia in the week ended 4 May, according to ICIS.

Meanwhile, SMR 20 natural rubber prices stood at $3,468/tonne at the Malaysian Rubber Exchange at midday on Thursday, down by nearly $200/tonne since early May.

NR and SBR are substitutes for each other in the production of tyres.

Tyres makers have not been buying spot SBR, as a number of them have cut production in response to the bleak data on vehicles sales, and as they have enough SBR stocks to cover their requirement up to end-June, industry sources said.

“Demand is much less than supply, and there are a lot of inventories. We are not anxious to procure any SBR, and can wait,” a tyre maker said.

China, the world’s biggest car market, vehicles sales in the first four months of 2012 declined 1.3% year on year, official data showed.

($1 = €0.77)

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

By: Helen Yan
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