08 June 2012 06:17 [Source: ICIS news]
By Helen Yan
In the week ended 7 June, BR prices were assessed at $2,900-3,000/tonne CFR (cost and freight) northeast (NE)
BR prices have been tracking falls in BD values, which shed $600/tonne since early May to $1,850-1,900/tonne CFR NE Asia in the week ended 1 June, ICIS data showed.
“There may still be room for the BR prices to drop further in June,” a trader said, citing the current wide spread between BR and BD prices.
Taking the latest price assessments by ICIS, the BR-BD price spread is at $1,050-1,100/tonne – way above the $600-700/tonne minimum required for BR producers to generate margins.
Downstream tyre makers are expecting BR prices to fall to around $2,600/tonne CFR NE Asia.
Apart from the plunging feedstock BD prices, weak demand and ample supply also weighed on BR prices, industry sources said.
Buying sentiment is being dampened by the ongoing eurozone debt crisis, a fragile
Major downstream tyre producers have cut operating rates to around 80% of capacity, while small- and medium-sized tyre makers have implemented a deeper cut in production, with current run rates at around 50-60% of capacity, given the uncertain global market outlook.
Major BR producers in
“Some BR producers have high inventories and dropped their prices as they have to clear their surplus stocks,” a trader said.
“We can get lower offers from other suppliers in
To offset the slump in demand, some major BR producers have reduced their operating rates.
Major South Korean BR producer Korea Kumho Petrochemical Co (KKPC) has further reduced operating rates at its 350,000 tonne/year BR plant at Yeosu to 60% in June from about 70-80% in May.
“If the feedstock BD prices were to rebound in July, then it is possible the BR prices may bottom out then,” a trader said.
($1 = €0.79)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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