No 2013 recovery in sight for Synthos' rubber margins - bank

11 February 2013 14:02  [Source: ICIS news]

LONDON (ICIS)--Poland's Synthos is unlikely to see a sustainable recovery in synthetic rubber margins emerging this year, Raiffeisen Centrobank (RCB) said on Monday.

“We remain cautious regarding short-term perspectives for Synthos given a decline of margins on the rubber market,” RCB analyst Dominik Niszcz said in a note to investors.

“The spot market at the end of 2012 was a negative surprise to us and it is hard to bet on a sustainable recovery this year. While Synthos should sell its PBR [polybutadiene] rubber at higher margins, the lack of spot opportunities that were driving results in 2011 and the first half of 2012 may depress figures in the upcoming months,” he added.

However, RCB was confident that the global tyre market was showing structural strength — with the main growth markets being China, Brazil and India — meaning demand from emerging economies for synthetic rubber should continuously grow over the years to come, Niszcz said.

Average prices of synthetic rubber fell by approximately 5% quarter on quarter in European contracts in the fourth quarter of last year and dropped again at the beginning of 2013, Austria-based RCB said.

Butadiene prices recovered last month in Asia and the US, implying a higher competitiveness of Synthos, but the year on year comparison still indicated a steep decline, it added.

A positive indicator for Synthos was that the average price of natural rubber was 10% higher in January compared with November.

“While it is too early to indicate a long-lasting trend, we closely watch the Asian market, where a continuation of price growth would support the synthetic rubber market,” Niszcz said.

By: Will Conroy
+44 20 8652 3214

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