FocusSBR in Asia to bottom out but deep-sea supply may cap rebound

20 June 2012 06:52  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Styrene butadiene rubber (SBR) prices in Asia may be near bottom but are unlikely to stage a sharp rebound because of competitive offers from European suppliers who are diverting their stocks to Asia, industry sources said on Wednesday.

The slump in demand in Europe amid a deepening euro-zone debt crisis has prompted the European SBR suppliers to channel their surplus stocks to Asia, industry sources said.

“We will increase our SBR offers for July, but we are facing stiff competition from the European suppliers and this makes it difficult for SBR prices in Asia to go up,” a northeast Asian SBR producer said.

Deep-sea cargoes from Europe including Russia and Eastern Europe have been heading towards Asia in search of customers, given the slump in demand in Europe, industry sources said.

Spot offers of East European and Russian SBR non-oil grade 1502 are available at $2,450-2,500/tonne (€1,936-1,975/tonne) CFR (cost and freight) northeast (NE) Asia, which are about $100/tonne lower than Asia-origin SBR, traders said.

“We can get offers of East European non-oil grade 1502 SBR at below $2,500/tonne CFR NE Asia,” a Chinese trader said.

However, some Asian SBR producers expect prices to stabilise and firm in the near term as demand has picked up.

“We are receiving more enquiries as the downstream tyre makers are coming back to the market to re-stock their dwindling inventories. They are asking for more volumes to cover their third quarter requirements,” another northeast Asian SBR producer said.

However, the price rebound will only be a modest one, given that the global market outlook is still uncertain.

Sentiment is still weak and buyers are cautious amid the escalating eurozone debt crisis, a fragile US economy and slowing economies in China and India, industry sources said.

“We do not expect a sharp price rebound but we expect prices to stabilize and firm in the near term in line with the feedstock butadiene (BD) prices, “a Chinese SBR producer said.

SBR prices have been declining in recent months because of poor demand and falling feedstock BD prices.

In the week ended 13 June, non-oil grade 1502 SBR prices were at $2,600-2,700/tonne CIF (cost, freight and insurance) China, down by nearly $1,000/tonne since February this year, in line with the feedstock BD price decline, according to data from ICIS.

The feedstock BD prices were at $1,800-1,900/tonne CFR (cost and freight) northeast (NE) Asia in the week ended 13 June, down by about $2,000/tonne since 10 February, when prices hit $3,900-4,000/tonne CFR NE Asia, ICIS data showed.

The feedstock BD makes up about 70% of the composition and production costs of SBR.

($1 = €0.79)

By: Helen Yan
+65 6780 4359

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