Price and market trends: Asia SBR uptrend likely to continue

11 October 2013 10:03  [Source: ICB]

Spot styrene butadiene rubber (SBR) prices in Asia look set to rise further on restocking activities when market players in China return after a week-long holiday, amid spikes in cost of feedstock butadiene (BD), industry sources said on 3 October.

The Chinese market had been closed since 1 October for National Day celebrations and re-opened on 8 October. Offers for non-oil grade 1502 SBR have increased by $100-200/tonne (€74-148/tonne) the week ended 4 October to $2,100-2,200/tonne CFR (cost and freight) Asia, largely on cost-push factor with BD prices going upwards.

On 2 October, non-oil grade SBR prices were assessed at $1,900-2,000/tonne CFR southeast (SE) Asia and India, $50-100/tonne higher from the previous week.

MARGIN PRESSURE

From early September, SBR prices have increased by 9%. Feedstock BD prices, on the other hand, surged by more than 20% over the past month to $1,450-1,520/tonne CFR NE (norhteast) Asia on 27 September, with market players expecting further increases because of tight supply.

“Our margins have been eroded by the escalating BD costs and we have no choice but to increase our spot offers for the non-oil grade 1502 SBR to $2,100-2,200/tonne CFR Asia,” an SBR maker said.

BD makes up about 70% of the composition and production cost of SBR.

Market players pointed to a slight pick-up in SBR demand from downstream tyre makers, but added that this is largely on concerns over further increases in BD costs.

“We are seeing more spot enquires this week and although some of the tyre makers have covered their requirements until November, some customers are seeking additional spot cargoes for early December delivery,” another SBR producer said.

SBR is a raw material used in the production of tyres for the automotive industry.

Spot availability for October has tightened considerably due to operating rate cuts and shutdowns at several SBR plants in China, South Korea and Taiwan.

Major South Korean SBR producer Kumho Petrochemical plans to shut its 560,000 tonne/year plant at Ulsan from 7 October for three to four weeks.

China’s Shen Hua Chemicals and Taiwan’s TSRC are also looking at reducing operating rates at their plants this month because of limited BD spot material.

“We have closed our October non-oil grade 1502 SBR shipments earlier at $1,800-2,000/tonne CFR India because we expect the feedstock BD prices to rise further, which will further push up the SBR prices,” an Indian tyre maker said.


By: Helen Yan
+65 6780 4359



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