15 May 2013 15:27 [Source: ICIS news]
LONDON (ICIS)--Competition in the eastern European styrene butadiene rubber (SBR) market has intensified in the past two weeks with Russian sellers offering very low prices, sources said on Wednesday.
"I have only bad news now...One of the Russian producers has become very aggressive and is undercutting us by offering SBR below €1,550/tonne [ free delivered (FD) Poland] with which we cannot compete," one Polish trader said.
There were reports last week that Russian producers entered the eastern European market with aggressive offers below €1,600/tonne ($2,246/tonne) cost and freight (CFR) Riga, which does not include mainland delivery.
The trader thought that the Russian producers must be under mounting pressure to shift cargo if they are willing to offer such low prices, which, in its view, do not even cover production costs.
As a result of competition from Russia, the traders' sales have dropped by 50% compared with the first quarter of 2013 and by about 30-40% compared to the second quarter of 2012.
Demand in Europe is unlikely to increase during the next three to six months because of poor car and tyre sales. The downstream automotive and tyre industries are the largest consumers of SBR and sales of these products have dropped by about 10-15% depending on region.
Tyre sale forecasts are not very optimistic and several tyre manufacturers have already cut output to reduce the length in the market. There are now expectations that the earliest time when tyre sales could potentially begin to climb is 2014, if even then.
($1 = €0.77)
Follow Janos Gal on Twitter @janosgalICIS
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