ESBR market may have turned corner for Poland's Synthos: bank

10 October 2013 15:44  [Source: ICIS news]

LONDON (ICIS)--The emulsion styrene butadiene rubber market (ESBR) may have turned a corner for Poland's major synthetic rubber producer Synthos, an investment bank said on Thursday.

October benchmark ESBR commodity margins saw the first increase since April 2013, moving up 11% month on month to €415/tonne, noted Prague-based WOOD & Company.

However, with October's benchmark ESBR commodity margins remaining 37% below the October 2012 level, the bank cautioned that end-product demand remained weak and that the recovery may prove only gradual.

Synthos, which secures a cost advantage against rivals by producing its own butadiene (BD) feedstock for a significant part of its output, was benefiting from an increase in European BD prices which reached €825/tonne ($1,115) in October against €775/tonne in September.

“The uptick in European butadiene prices reflects the rebound in Asian [BD] pricing, driven by lower utilisation rates in China, South Korea and Taiwan as well as increased restocking in the Asian market driven by expectations of further BD price hikes in the short term,” said WOOD & Company chemical industry analyst Piotr Drozd.

European ESBR contract prices ticked up 3% month on month in October to €1,455/tonne, driven by the BD feedstock price rise, he said.

“Styrene prices have retreated 5% month on month in October contracts to €1,458/tonne, decreasing the pressure on ESBR margins,” Drozd also noted.

($1 = €0.74)

By: Will Conroy
+44 20 8652 3214

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