11 July 2013 16:42 [Source: ICIS news]
By Mark Yost
HOUSTON (ICIS)--Call it a tale of two petrochemicals.
Styrene-butadiene-rubber (SBR) and butadiene (BD) have both seen the bottom fall out of their respective markets over the past year, mainly because of a global downturn in the replacement-tyre market.
The spot price for US BD has dropped by 41% over the past year, from 97.5 cents/lb ($2,149/tonne, €1,676/tonne) to 57.5 cents/lb today. Similarly, the average spot price for SBR 1502 has fallen nearly 23% from 113.5 cents/lb a year ago to 87.5 cents/lb today.
But when it comes to arbitraging spot material, the clear winner is European SBR moving to the ?xml:namespace>
While Asian and European spot BD are priced below or on par with US BD, the key is shipping. It costs about $150/tonne to bring SBR to the
Where are US SBR users getting their imported material? According to market sources, the cheapest material is coming from
US SBR costs more, sources said, because US BD prices are still too high.
The July contract price for US BD is 66 cents/lb, down by 8 cents/lb from the June contract price of 74 cents/lb and down nearly 20 cents/lb from the April price of 84 cents/lb.
BD spot prices in the
All of this has led US BD customers -- including SBR producers -- to push US producers to cut the August BD contract price by another 8 cents/lb to 58 cents/lb, sources said.
But even that may not be enough to make US BD (and SBR) competitive in a global market. That is because continued weakness in the replacement-tyre market, which uses about 80% of the SBR produced in the
The long-term outlook does not get much better. Market sources noted that expectations for a recovery in the global tyre market keep getting pushed further out.
Earlier this year, the expectation was that demand for replacement tyres would improve in the second half of 2013. Then, market sources said it would be first quarter 2014 before the tyre market recovered. Now, the view is sometime in the first half of 2014, if then.
"I've stopped trying to guess," said one market source. "The truth is, no one knows, and the macroeconomic fundamentals that would be needed to turn around that market aren't looking good."
US producers of BD include ExxonMobil, LyondellBasell, Shell and TPC Group. SBR producers include
($1 = €0.78)
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