Weak Europe tyre demand hurting Poland's Synthos - bank

08 November 2012 14:46  [Source: ICIS news]

LONDON (ICIS)--Major Poland synthetic rubber producer Synthos is suffering from weak tyre demand in Europe, investment bank WOOD & Company said on Thursday.

“Amid weak European tyre demand, the styrene butadiene rubber (SBR) market remained tough in Q3, with synthetic rubber prices extending declines from €2,375/tonne ($3,045/tonne) in June to €2,210/tonne in September,” Piotr Drozd, a chemical sector analyst at the bank, wrote in a note to investors.

Average third-quarter European emulsion styrene butadiene rubber (ESBR) contract prices fell 16% quarter on quarter and were down 29% year on year, the analyst said.

While the butadiene price slump was even more pronounced - down 27% quarter on quarter and 38% year on year - styrene prices held up quite well, declining only 1% versus the second quarter and increasing 12% year on year, he added.

“This had a negative effect on benchmark ESBR margins,” Drozd said, which according to WOOD & Company's estimates compressed by 5% quarter on quarter and 31% year on year.

“Against these headwinds, we expect Poland's Synthos to publish weak Q3 results [on 13 November],” he added.

“With ESBR prices heading south”, Drozd forecast a 9% quarter on quarter pullback in Synthos' third-quarter revenues to zlotych (Zl) 1.49bn ($0.46bn, €0.36bn).

Net profit would likely sink 50% to Zl 142m, he added.

($1 = €0.78, $1 = Zl 3.24, €1 = Zl 4.14)


By: Will Conroy
+44 20 8652 3214



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