FocusAsia SBR may extend gains on BD, NR price increase

10 May 2013 04:57  [Source: ICIS news]

By Helen Yan

SBR is used in the manufacture of tyres for the automotive sector.SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) prices rebounded in Asia and may continue to increase in the near term, in line with rising values of feedstock butadiene (BD) and of rival product natural rubber, industry sources said on Friday.

Further gains, however, are likely to be moderate as the market is well-supplied while demand is not expected to strengthen by much, they said.

On 8 May, non-oil grade 1502 SBR prices were assessed at $2,050-2,100/tonne (€1,579-1,617/tonne) CIF (cost, insurance and freight) China, up by an average of $50/tonne from the previous week, according to ICIS.

Prior to this week’s gains, SBR prices tumbled by about 20% from early March, ICIS data showed, as sellers had cut prices to clear their surplus stocks.

“The SBR price will rise because of the rebound in the BD and NR prices. But it will be difficult for the SBR price to rise significantly as there are still some inventories to be cleared,” a Chinese rubber distributor said.

BD, which makes up 70% of SBR, is on its third straight week of price gains at $1,450-1,520/tonne CFR NE (northeast) Asia on 3 May, up by 12% from 12 April, according to ICIS.

Meanwhile, tyre grade SMR 20 NG prices are also on the rise, piling up $110/tonne of gains from 3 May to $2,540/tonne on 8 May.

SBR and NR tend to move in tandem as they are substitute raw materials in the production of tyres for the automotive industry.

In view of the rising BD cost and NR prices, major SBR producers are targeting at least a $100/tonne hike in offers for non-oil grade 1502 SBR to $2,200-2,250/tonne CIF China.

In February, warehouses at China’s Qingdao trading hub were overstocked with NR and synthetic rubber totalling some 350,000 tonnes, a historical high, as Chinese traders imported more than what was required.

The stocks seldom exceed 300,000 tonnes at Qingdao warehouses, according to industry sources.

Chinese traders have been selling and exporting the surplus stocks at the Qingdao rubber trading hub in recent weeks at competitive rates following a directive from the Chinese authorities to clear one-year-old rubber goods and those older, after a fire hit the hub in early March, industry sources said.

Although the surplus SBR inventories are currently being absorbed, demand may not strengthen significantly amid a slowing Chinese economy, industry sources said.

China is the world’s second biggest economy and the its largest automotive market, as well as a major production centre for global tyre manufacturers such as Bridgestone, Goodyear, Michelin and  Kumho Tires.

“Sentiment is still weak and buyers are cautious and adopting a wait-and-see stance,” a northeast Asian SBR maker said.

“We are also not sure whether the NR price rally is sustainable,” a rubber trader said.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
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