19 April 2013 04:12 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) prices in Asia may continue to fall in the near term, dragged down by declining values of substitute product natural rubber (NR) and feedstock butadiene (BD), industry sources said on Friday.
Abundant SBR supply amid weak demand are forcing sellers to reduce their offers, they said.
On 17 April, non-oil grade 1502 SBR were on its sixth week of decline at $2,050-2,100/tonne (€1,579-1,617/tonne) CIF (cost, insurance and freight) China, shedding 17% from 6 March, according to ICIS data.
At the Malaysia Rubber Exchange, tyre grade SMR 20 NR physical prices closed at $2,330/tonne on Thursday, down by $560/tonne or 20% from 1 March.
“NR prices are falling and anything is possible now,” a Chinese rubber trader said.
NR and SBR are raw materials used in the production of tyres for the automotive industry, and their prices tend to move in the same direction.
Meanwhile, falling cost of feedstock BD is also weighing heavily on the SBR market.
BD, which makes up about 70% of SBR’s composition and production costs, had about a 35% price plunge since 1 March to $1,300-1,350/tonne CFR (cost and freight) northeast (NE) Asia on 12 April, according to ICIS data.
Demand for SBR has remained weak, with China – the world’s biggest automotive market – continuing to show signs of slowing down.
In the first quarter of the year, the Chinese economy grew at an annual rate of 7.7%, which came in lower than expected, and represents a deceleration from the 7.9% expansion recorded in the previous quarter.
Last year, the world’s second biggest economy posted a 7.8% growth – its slowest in 13 years.
China’s domestic SBR prices have declined by more than CNY3,500/tonne ($566/tonne) since early March to CNY13,000-13,600/tonne EXWH (ex-warehouse) this week, according to Chemease, an ICIS service in China.
“The second quarter looks bad as demand is very sluggish, and we expect prices to remain flat or weak,” a rubber distributor said.
A rebound in the cost of feedstock BD, however, could halt SBR’s decline and prevent the price from falling below $2,000/tonne CIF China, market players said.
($1 = €0.77 / $1 = CNY6.18)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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