OUTLOOK '13: US SBR market struggling to see growth in 2013

28 December 2012 22:05  [Source: ICIS news]

HOUSTON (ICIS)--The US styrene butadiene rubber (SBR) market has been struggling as its top end users – tyre makers – have seen almost stagnant movement of finished goods over the past several months, and it looks like that will remain the case well into the first half of 2013.

According to a recent report from the Rubber Manufacturers Association (RMA), a US trade organisation that promotes tyre sales and safety, the latest forecast for total 2012 tyre sales in the US calls for no growth from 2011.

That was the second revision of the group’s forecast. Initially, it called for growth of 2%. In August, it trimmed that projection to 1.1%.

In fact, the tyre market was fortunate that 2012 was a strong year for US sales of passenger cars and light trucks.

Through November, there were more than 13m cars and light trucks sold in the US, an increase of 14% over the same period in 2011.

In 2011, a total of 12,778,171 cars and light trucks were sold in the US.

The growth in new vehicle sales from 2011 to 2012 may look promising. However, original equipment (OE) tyres comprise only 20-25% of the tyre market.

The RMA also found that more than 13% of the vehicles on the road today have at least one bald tyre on the road.

Total 2012 sales of replacement tyres will decrease year on year by more than 4m units, or nearly 2%, to 190m units. The association said demand failed to materialise because of continued soft economic conditions and cautious consumers.

On the bright side, the RMA said it believes that an increase in vehicle miles driven and improved economic growth should result in a nearly 2% increase in the number of tyres sold in 2013, or approximately 6m units.

However, sources in the SBR market, as well as the feedstock butadiene (BD) market, believe SBR demand will remain flat well into the first half of the year.

One source said it sees at least the first half of 2013 mirroring the final six months of 2012.

Some market sources evaluate the prices being paid for material as an indication of market performance.

The average SBR contract was 117 cents/lb in November 2012, compared with 131 cents/lb in 2011, a decline of 11%.

In the BD market, the December contract price is more than 50% less than the April price, the year’s highest.

SBR producers are hoping that, as the RMA predicts, more miles driven on older cars and a better economic outlook will soon lead to increased tyre sales, and therefore, a positive change for the market.

($1 = 0.76)

By: Wesley Busch
+1 713 525 2653

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