26 April 2013 10:05 [Source: ICB]
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 19 April.
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 18 April, 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 in the production of tyres for the automotive industry, and 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, experienced a 35% price plunge from 1 March to $1,300-1,350/tonne CFR (cost and freight) northeast (NE) Asia on 12 April, according to data from ICIS.
Demand for SBR has remained weak, as China - the world's biggest automotive market - continues to show signs of slowing down.
In the first quarter of 2013, the Chinese economy grew at an annual rate of 7.7%, lower than expected and lower than the 7.9% expansion in the previous quarter.
SLOWING CHINA GROWTH
Last year, the world's second biggest economy posted a 7.8% growth - its slowest in 13 years.
Its domestic SBR prices have fallen by more than CNY3,500/tonne ($566/tonne) since early March to CNY13,000-13,600/tonne EXWH (ex-warehouse), according to ICIS service Chemease.
"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.
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