FocusAsia synthetic rubber may fall further in June on weak demand

23 May 2012 04:57  [Source: ICIS news]

By Helen Yan

Tyres are the biggest downstream to SBRSINGAPORE (ICIS)--Asia synthetic rubber prices (SR) are expected to fall further in June because of continued weakness in demand amid the heightened eurozone debt crisis, industry sources said on Wednesday.

Oversupply and weak demand are putting pressure on the synthetic rubber prices to weaken further in June, industry sources said.

“We are under pressure to reduce our offers for June as demand is weak and suppliers and traders are offloading their surplus stocks as they fear that prices may drop further,” a northeast Asian SR producer said.

SBR non-oil grade 1502 spot prices were at $2,900-3,000/tonne (€2,291-2,370/tonne) CIF (cost, freight, insurance) China in the week ended 16 May, down by $400-450/tonne since 18 April, ICIS data showed.

BR spot prices were at $3,300-3,400/tonne CFR (cost and freight) northeast (NE) Asia in the week ended 17 May, down by $350/tonne since 19 April, ICIS data showed.

Apart from weak market conditions, plunging feedstock butadiene (BD) prices also added to the downward pressure on SR prices.

Feedstock BD prices were at $2,150-2,250/tonne CFR (cost and freight) northeast (NE) Asia in the week ended 18 May, down by more than $1,000/tonne since 20 April, according to ICIS.

“We expect the feedstock BD prices to drop further below $2,000/tonne CFR NE Asia soon and this will put more downward pressure on the synthetic rubber prices,” a Chinese synthetic rubber producer said.

In response to the continued weakness in demand and oversupply situation, Asia’s larges synthetic rubber producer, South Korea’s Kumho Petrochemical (KKPC), has further cut the operating rates of its synthetic rubber plants this week.

It 430,000 tonne/year SBR plant will run at a further reduced rate of 40-50% of capacity  while its 350,000 tonne/year BR plant at Yeosu will run at a further reduced rate of 60% of capacity until mid-June, a company source said on Wednesday.

Both the SBR and BR plants were running at reduced rates of 70-80% of their capacities since early May, the source added.

“The situation is very critical and we have no choice but to further cut the operating rates of our plants,” the source said.

($1 = €0.79)

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

By: Helen Yan
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