Bank lifts rating of Synthos on long-term light vehicles growth

01 May 2013 11:40  [Source: ICIS news]

LONDON (ICIS)--Raiffeisen Centrobank (RCB) has raised its recommendation on the stock of Polish synthetic rubber producer Synthos to "hold" from "reduce", citing encouraging figures on the growth of the light vehicles market over the long term, the bank said on Wednesday.

“Despite the current [synthetic rubber] margin contraction, which we consider as painful but rather temporary, we reiterate our confidence in the long-term tyre market growth,” said Dominik Niszcz, an analyst at RCB.

“According to AlixPartners consultancy, the global market for light vehicles will grow from 72 million in 2010 to 92 million in 2015 and nearly 107 million in 2020, with more than one-third of growth driven by China,” he added, saying the new sales should translate into higher original tyre and replacement tyre sales.

Over the long term, replacement tyre sales would be boosted by a constant increase of the driver population, even in western markets, where people were living longer in good health and thus continued to drive during retirement, Niszcz said.

Looking ahead on the raw materials side, RCB saw no significant growth in butadiene (BD) supply as naphtha crackers were still losing ground to ethane-based plants.

Global industry players fear that BD shortages might remain a recurring issue, Niszcz said.

The global supply of BD may trail the projected increase in demand by only climbing to approximately 14 million tonnes in 2016, from 12 million tonnes in 2011, he added.

Synthos enjoys its own partially integrated BD production.

By: Will Conroy
+44 20 8652 3214

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