FocusChina SBR rebounds on rising BD; ample supply to temper gains

13 December 2012 03:45  [Source: ICIS news]

By Sunny Pan

BR and SBR go into the production of tyres for the automotive industry.SINGAPORE (ICIS)--Domestic prices of styrene butadiene rubber (SBR) in China rebounded this week, backed by rising cost of feedstock butadiene (BD), but ample supply may temper further gains in the coming weeks, market sources said on Thursday.

Non-oil grade SBR 1502 was assessed at yuan (CNY) 16,100-16,600/tonne ($2,576-2,656/tonne) ex-warehouse (EXWH) east China on 12 December, up by CNY700/tonne from the previous week, according to Chemease, an ICIS service in China.

Oil-extended grade SBR 1712, on the other hand, stood at CNY14,100-14,800/tonne EXWH east China, higher by CNY500-600/tonne over the same period.

Some SBR traders said they are restocking and will not sell cargo until prices increase by more than CNY1,000/tonne.

Feedstock BD, on the other hand, increased by about CNY700/tonne from last week to CNY12,100-12,300/tonne on 12 December, buoyed by expectations of strong demand as new downstream synthetic rubber plants will come on stream early next year, Chemease data showed.

Transfar Group will be starting up its new 100,000 tonnes/year BR plant in Zhejiang province in February 2013, while YPC-GPRO (Nanjing) Rubber Co Ltd will commence production at its new BR plant with the same capacity in Jiangsu province in the second quarter of 2013, industry sources said.

While increased demand will likely further drive up BD prices in China, downstream SBR values may not significantly increase given abundant domestic supply while demand continued to be weak.

The global automotive industry is in a slump, with car manufacturers cutting back on production that leads to reduced requirement for tyres, and consequently, lower consumption of raw materials BR and SBR.

Nonetheless, Chinese SBR facilities are still running at relatively high rates of 80% on average, industry sources said.

China's total effective SBR capacity is expected to be at 1.5m tonnes/year by end-December, they said.

($1= CNY6.25)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Sunny Pan

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