05 August 2013 06:47 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) values in Asia look set to rise further on tightening regional supply amid ongoing production cutbacks, as cost of feedstock butadiene (BD) resumed its uptend, industry sources said on Monday.
Re-stocking activities by traders prompted sellers to hike offers for August material, they said.
Spot offers for non-oil grade 1502 SBR for August shipments are being quoted at $1,700-1,750/tonne CFR (cost and freight) northeast (NE) Asia, up by $100/tonne from previous offers, market sources said.
On 31 July, non-oil grade SBR 1502 prices increased $50/tonne week on week to average $1,575/tonne CIF (cost, freight, insurance) China, according to ICIS data.
Prior to last week’s gains, SBR has declined by nearly 40% since early March, ICIS data showed.
SBR is a raw material in the production of tyres for the automotive industry.
“Traders are re-stocking their dwindling inventories as they expect SBR prices to rise in the near term because of higher feedstock BD costs,” a regional SBR producer said.
The higher SBR offers were largely on account of a rebound in feedstock BD prices, industry sources said.
On 2 August, BD prices are on their second week of gains, rising an accumulated $130/tonne to average $1,000/tonne CFR NE Asia, according to ICIS.
“We have to raise the non-oil grade 1502 SBR prices to more than $1,700/tonne CFR NE Asia because of the higher feedstock BD costs,” a regional SBR producer said.
SBR supply, meanwhile, is tightening in Asia following a spate of production cutbacks and extended shutdowns at facilities in China, South Korea and Taiwan, industry sources said.
Major SBR makers including LG Chem, Korea Kumho Petrochemical Co, TSRC, Shen Hua Chemicals, Tianjin Lugang, Zhechen Rubber and Fushun Petrochemical, have cut their production or shut down their plants because of slumping SBR prices in recent months.
In the key China market, domestic prices of non-oil grade 1502 SBR averaged CNY (yuan) 11,750/tonne ($1,917/tonne) EXWH (ex-warehouse) in east China on 1 August, up by CNY200-300/tonne from the previous week, according to Chemease, an ICIS service in China.
Domestic BD prices in China, on the other hand, rose to CNY9,500/tonne DEL on 2 August, up by CNY1,000/tonne week on week.
($1 = €0.75 / $1 = CNY6.13)
Additional reporting by Sunny Pan
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