High prices could dampen Europe SBR demand - traders

21 March 2013 17:24  [Source: ICIS news]

PARIS (ICIS)--There are concerns high European styrene butadiene rubber prices (SBR) could dampen demand, traders at the International Rubber Conference in Paris said on Thursday.

On trader questioned how long poor market fundamentals could support relatively high SBR prices.

Another trader at the conference said that for months customers have been unwilling to commit to buying large volumes in advance and most buyers are now waiting with purchases until the last minute.

In March 2012, feedstock butadiene (BD) prices were at €2,185/tonne ($2,838/tonne) free delivered (FD) northwest Europe (NWE). In March 2013, the price was at €1,415/tonne FD NWE.

During the same period, 1500 grade SBR prices fell from €2,675-2,750/tonne FD NWE, to €1,860-1,950/tonne FD NWE.

According to sources, there is potential for increases in April, if feedstock BD costs go up.

"Demand is so low - I don't know how long the market will be able to support further price increases," the first trader said.

European replacement tyre sales and new car registrations have declined drastically during the past 12 months, which has weighed down on the SBR industry. The tyre and automotive industries are the two largest consumers of SBR.

Replacement car tyre sales dropped by more than 10% in 2012 compared with 2011, and replacement truck-tyre sales fell by a third during the same period.

"It is very difficult to sell now, buyers only order when they have hardly anything left, they are just not interested," the second trader said.

It added that having had quite a few discussions with other traders and market participants at the conference, it has the impression now that everyone is in the same position and most sellers are struggling to shift volumes.

The trader added: "The market is still long, and there are plenty of offers [from other suppliers], so it is difficult to maintain our market share."

The International Rubber Conference 2013 runs from 20-22 March.

($1 = €0.77)

By: Janos Gal
+44 208 652 3214

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