Chemical Profile: Asia SBR

08 March 2013 09:17  [Source: ICB]

USES
Styrene butadiene rubber (SBR) is the most widely used synthetic rubber. Emulsion SBR (E-SBR) contains 23.5% styrene and 76.5% butadiene (BD).

E-SBR is predominantly used for the production of car and light truck tyres and truck tyre retread compounds, which accounts for more than 75% of global consumption.

Mechanical goods account for 15% and automotive goods for 5%, while other uses such as adhesives, floor tiles and shoe soles account for about 4%. Adhesives and chewing gum have been identified as two growing markets for SBR applications.

SUPPLY/DEMAND
Asia SBR supply in the fourth quarter of 2012 was augmented by the availability of deep-sea material from Europe. Poor market conditions amid the eurozone countries prompted several European SBR suppliers to export their surplus stocks to Asia.

Several SBR plants in Asia cut their production output in light of the downward pressure on SBR prices in the fourth quarter, including Taiwan's TSRC and South Korea's Kumho Petrochemical Co (KKPC).

Supply is expected to increase in Asia in 2013 as several new SBR plants are slated to start up in China this year. About 350,00 tonnes of additional SBR supply are expected to come on stream in China in 2013. The companies due to start up new SBR plants are: Shandong Huamao, Lugang Petroleum Rubber, Liaoning North Xingan Dynasol Styrene Rubber and Zhejiang Sanwei Rubber Item.

However, global demand in 2013 may not increase as expected because of the weak global automotive market. Several major car makers - including General Motors, Ford Motors and Peugeot - have announced job and production cuts at their plants in crisis-ridden Europe.

Accordingly, several global tyre makers including Bridgestone, Goodyear and Michelin have also cut production output at several facilities in Europe and the US.

PRICES
In the fourth quarter of 2012, non-oil grade 1502 SBR prices fell by about $200/tonne from mid-November to bottom out at $2,150/tonne in early December 2012, as weak macroeconomic conditions hit demand.

However, from December 2012 onwards, SBR prices have continued to trend up, lifted by soaring feedstock prices and buoyant natural rubber (NR) prices. SMR 20 NR prices at the Malaysian Rubber Exchange rose to more than $3,100/tonne FOB Malaysia in February.

NR and SBR are substitutes for each other and their prices tend to move in tandem.

TECHNOLOGY
SBR is one of the most versatile copolymer rubber compounds. It consists of the organic compound styrene and the chemical BD, with the amount of BD usually about triple the amount of styrene. This compound is produced either through ionic polymerisation of a solution or as an emulsion through free radical polymerisation.

Also known as E-SBR, this product was first developed in the 1930s by IG Farbenindustrie in Germany. It was created through an emulsion procedure that used polymerisation as the means of producing a material that had a low reaction viscosity but had all the attributes of natural rubber.

OUTLOOK
SBR non-oil grade 1502 prices may rise in the second quarter of 2013 as end-user demand from the downstream tyre makers is expected to pick up.

SBR non-oil grade 1502 prices rose to $2,500/tonne CIF China by the end of February, up by $250/tonne since the end of January. The price uptrend was mostly due to the surge in the feedstock BD price in early 2013.

The BD price jumped by $400/tonne - or nearly 25% - from early January to hit $2,100/tonne CFR NE Asia in mid-February amid disrupted BD supply in Europe and on the back of speculative trades.

End-user demand for SBR was lacklustre in the first quarter of 2013 because the downstream tyre makers had earlier procured sufficient stocks to cover their requirements until April. Weak macroeconomic conditions in the global market and abundant deep-sea supply from Europe also helped suppress the SBR prices in Asia in the first quarter of 2013.

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By: Helen Yan
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