Europe rubber markets provide no respite for Synthos - bank

16 April 2013 12:13  [Source: ICIS news]

LONDON (ICIS)--Major synthetic rubber producer Synthos cannot depend upon European markets for an improvement in its fortunes with the region's automotive industry remaining in a dire state, Austria-based Raiffeisen Centrobank (RCB) said on Tuesday.

Latest pricing figures from Asia implied Synthos’ product had become uncompetitive versus that of Asian synthetic rubber producers, but there was likely to be “no relief from European clients as the European automotive industry remains in a dreadful condition,” said RCB analyst Dominik Niszcz.

Aluminium producer Alcoa, in its latest forecast for European aluminium demand from the automotive sector, slightly moved down its previous projection to a deeper decline, while reports of lower truck sales in Europe were another negative factor Synthos must contend with, he added.

European synthetic rubber maker LANXESS has predicted tyre production in western Europe will fall 7.5% year on year in 2013 and that auto production will drop 8.5%, while on 12 April the European Tyre and Rubber Manufacturers’ Association (ETRMA) said European replacement tyre sales in the first quarter of 2013 fell 12% year on year.

“I believe that the recovery for the synthetic rubber Synthos products should come from Asia but the latest data from China and the general collapse on the commodities markets indicate that we may wait a bit longer for improvement in the rubber market,” Niszcz said.

Depressed butadiene (BD) prices, which were rolled over from March to April, have meant that Asian synthetic rubber manufacturers have been able to overcome the feedstock costs advantage which Synthos usually enjoys from the integrated BD production which these rivals do not have, he added.

By: Will Conroy
+44 20 8652 3214

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