17 January 2013 19:50 [Source: ICB]
Demand remains weak while feedstock butadiene prices could rise in the coming months
US styrene butadiene rubber (SBR) December contract prices rolled over from November in a weak market, sources confirmed on 9 January.
Contract prices have been at these levels since the September contract prices were determined. Prior to that, the last time 1502 grade was at this level was in December 2011. Contract prices for 1712 grade were even lower in December 2011.
SBR 1502 and 1712 contract prices peaked in April 2012, moving up strongly with the February and March contract prices, which mimicked the movement in butadiene (BD) contract prices for those two months.
Since the April contract prices, contract prices for SBR 1502 and 1712 and BD have moved down or remained flat in each of the months through December. SBR 1502 contract prices have fallen by an average of 29% since the April peak, while SBR 1712 contract prices have moved down by an average of 31%.
A majority of BD contract prices have dropped by 48% since their peak in April.
The January BD contract price rolled over from December as a majority of the BD producers that participate in the contract negotiation process held their prices at 76 cents/lb. A fourth producer rolled its January contract price from December at 83 cents/lb.
At least one SBR producer expects that BD suppliers could push for an increase for the February contract, although, the producer said, the move would not be warranted.
Another SBR producer expects demand may increase in January as buyers restock their inventories, but the producer does not anticipate it will be a huge uptick compared with December.
Tyres, which are the main end use of SBR, have seen weak sales in the US. Just prior to the end of the year, the Rubber Manufacturers Association (RMA), a trade organisation, projected flat growth in tyre sales because of a downturn in sales of replacement tyres caused by economic sluggishness.
North American SBR producers include American Synthetic Rubber Co (ASRC), Ashland, Firestone Polymers, Goodyear Tire & Rubber, LANXESS, Lion Copolymer and Negromex.
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