Price and market trends: European SBR exports up 45% driven by poor local demand

29 November 2012 18:47  [Source: ICB]

Industry has been under pressure from high feedstock costs and low sales volumes throughout the year

Emulsion styrene butadiene rubber (E-SBR) exports from the EU to the rest of the world have increased by 45% during the first eight months of 2012 to 132,823 tonnes compared to the same period in 2011, Eurostat data showed.

The increase in exports from the EU results from a drastic fall in E-SBR demand from the European tyre industry, leading producers to seek to offload stocks in overseas markets where prices were higher.

"As Europe is hardly moving, material is exported to other countries [so producers can maintain] their total sales capacity," an SBR buyer said.

OFFLOADING ABROAD
A major SBR producer in Europe said that most European sellers have indeed been seeking to offload stocks abroad, especially in Asia, where prices were more competitive and demand held up even when European sales fell.

"Because the European market is weak, sellers are exporting to other countries to secure sales volumes," the producer said.

So far this year SBR demand has fallen by about 15%, mostly because tyre sales are down, the producer added. The tyre industry is the largest SBR consumer.

Passenger replacement tyre sales fell by 18% in the first 10 months of 2012 , while truck tyre sales fell by 30%, a tyre producer said.

The European market for new passenger cars shrank by 4.8% in October year on year, the European Automobile Manufacturers' Association (ACEA) said.

This is bad news for the industry, which has been under pressure from high feedstock costs and low sales volumes all year. And given feedstock butadiene (BD) prices are higher in Europe than in Asia now, the arbitrage window for exports has closed, an exporter said.

PRICE DIFFERENCES
According to ICIS, in Asia BD is traded at $1,630-1,700/tonne CFR (cost and freight ) northeast (NE) Asia (€1,271-1,326/tonne), while in Europe it is at €1,480/tonne free delivered (FD) northwest Europe (NWE). November 1500 grade SBR contracts settled at €2,050/tonne FD NWE in Europe, and at $2,300-2,350/tonne CIF (cost, insurance, freight) China.

The difference means there is little scope to export to Asia as Asian buyers can get material cheaper locally. As a result, exports in September held up, but in October and November there was a visible drop in overseas sales as European SBR became more expensive on high feedstock and production costs, sources said.


By: Janos Gal
+44 208 652 3214



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