FocusChina SBR prices under pressure on oversupply, weak demand

18 March 2013 02:32  [Source: ICIS news]

By Sunny Pan

ChinaSINGAPORE (ICIS)--China styrene-butadiene-rubber (SBR) prices, on a downtrend since last month, are likely to remain under pressure as a result of oversupply and poor demand from downstream tyre makers, industry sources said on Monday.

SBR prices fell by yuan (CNY) 1,800-1,900/tonne ($290-306/tonne) to CNY15,400-16,000/tonne for non-oil grade SBR 1502 (EXWH east China) on 14 March from 19 February, according to data from Chemease, an ICIS service in China.

Similarly, in the same period oil-extended grade SBR 1712 fell by CNY1,300-1,400/tonne to CNY14,100-14,600/tonne (EXWH east China).

“We are in a hurry to offload our SBR inventory but find it hard to find buyers when most downstream tyre and belt makers have too much feedstock,” a China-based SBR trader said.

SBR prices are likely to fall further to attract buying which has slowed down, he added.

The downstream tyre makers are staying on the sidelines, as they expect lower prices in the coming weeks, given the ample stock and falling BD feedstock costs.

BD prices fell by CNY1,300-1,400/tonne to CNY13,800-14,000/tonne (DEL east China) on 14 March from 25 February.

“Demand is so poor that we lack confidence in the SBR market in the second quarter. As a result we are planning to cut operation rate from 100% to 80% in April and even lower in May if the poor market sentiment remains,” a China-based SBR producer said.

Over supply of SBR in China is attributed to high run rates at around 83% from late December in 2012 to March in 2013. Low feedstock in end 2012 led to nearly full operation rate at most of the country’s SBR plants.

Traders and most downstream tyre makers actively purchased SBR in December 2012 and January 2013 expecting a bullish market after the Lunar New Year holidays ( 9-15 February) but their expectations did not materialise as the market did not rebound.

SBR prices fell after Lunar New Year in line with a decline in most of the commodity values including natural rubber (NR), which is also a main feedstock for tyres.

NR prices in the Shanghai Futures Exchange (SHFE) for September delivery closed at CNY22,785/tonne on 14 March, a decrease of CNY 4,475/tonne compared with prices on 5 February. Falling NR prices pressed down SBR market sentiment.

Most SBR producers said that there is nearly no margin with SBR prices falling faster than the feedstock values. As a result the producers may lower operation rates to reduce over-stocked inventories.

Operation rate of China SBR plants is likely to be cut a lot by planned maintenance and irregular cut-backs in April, they added.

Qilu Petrochemical’s plans to shut down its 250,000 tonnes/year SBR plant from early April to end May for regular maintenance. 

Shenhua Chemical plans to cut operation rate at its 180,000 tonne/year SBR plant  to 80% of capacity from 100% due to poor demand.

($1 = €0.77 / $1 = CNY6.20)

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


By: Sunny Pan



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