31 October 2012 12:02 [Source: ICIS news]
(recasts, clarifying lead)
LONDON (ICIS)--European 1500 grade spot styrene butadiene rubber (SBR) prices have fallen below €1,900/tonne ($2,468/tonne) for the first time since January 2011, driven by exceptionally weak demand from derivative industries, sources said on Wednesday.
"Even though prices are low, I would not call it a buyers' market as everyone is in a big, deep hole now, not just SBR producers," a SBR producer said.
The spot price of 1500 grade SBR has dropped by €140-150/tonne to €1,850-1,900/tonne free delivered (FD) northwest Europe (NWE) this week. Most sources said this is because of cheap imports from Russia and lower priced deals from European suppliers that seek to offload stocks.
The spot prices of 1723 and 1783 grade SBR have fallen by €100/tonne to €1,750-1,850/tonne FD NWE and €1,700-1800/tonne FD NWE, respectively.
"Producers have decreased their prices as material is easily available, but even then buyers are not ready to buy. They expect longer payment terms, but it’s quite risky looking at the current financial situation," a SBR trader said.
SBR is mostly used by the tyre industry which has seen sales fall significantly this year with people driving less as fuel prices have risen. In addition, industrial rubber production has fallen because of lower demand for conveyor belts and other industrial applications.
"[Although spot offers from Russia are competitive] we have not dropped or regular suppliers because when the market was difficult last year and the year before they always provided us with what we needed," a tyre producer said.
According to industry sources, replacement car-tyre sales have declined by 10-20% compared with last year, with the higher end of the range being in southern Europe. Replacement truck-tyre sales are down about 20-40%, with the higher end again representing southern Europe.
"Unless there is a miracle or some government incentives, I don't expect anything to improve during the first quarter," the tyre producer added.
($1 = €0.77)
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