24 April 2013 17:56 [Source: ICIS news]
LONDON (ICIS)--European styrene butadiene rubber (SBR) contract prices in May could roll over or decline slightly depending on feedstock cost settlements next week, sources said on Wednesday.
According to one SBR maker, feedstock butadiene (BD) prices in May will either roll over or decline, and whatever the outcome of feedstock negotiations is, SBR prices will follow.
Demand continues to be well below what is expected at this time of the year with the summer season approaching. Offtake from the tyre industry is especially poor, and this is unlikely to improve much during the rest of the year because of the ongoing macroeconomic downturn in Europe.
Sales in southern Europe have been described as especially worrying and this will be made worse by announcements from tyre makers that they will reduce output in the upcoming months. Two tyre manufacturers in Italy have already told ICIS that they have reduced output and others are likely to follow to reduce overcapacity in Europe.
Speciality SBR types are selling better than commodity SBR, but even in those markets competition is tough. According to a western European producer, SBR demand should pick up during the third or fourth quarters but the producer admitted that much of this prediction is based on hopes and the end result might be different.
A tyre producer believed the end is still not in sight and the current negative outlook will continue until at least the beginning of 2014 and probably even until mid-2014 before any real recovery is seen.
For now the market shows no signs of recovery and there is no reason to believe it will improve in the short term.
Contract negotiations will begin next week after feedstock settlements.
Follow Janos Gal on Twitter @janosgalICIS
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