25 October 2013 10:01 [Source: ICB]
Styrere butadiene rubber (SBR) is the largest volume synthetic rubber. More than 70% of SBR is consumed in the manufacture of tyre products. Other uses include footwear, industrial hoses, conveyor belts and gloves, among others.
There are two major types of SBR: emulsion (E-SBR) and solution (S-SBR). E-SBR continues to lose ground to S-SBR, which can better meet the stringent specifications for high-performance tyres.
SBR is available in three different grades; 1500 grade, which is a non oil extended grade; and 1723 and 1783, which are oil extended grades.
EU legislation introduced in November 2012 enforcing the labelling of tyres with information such as fuel economy, is likely to incentivise the take-up of S-SBR in the production of more energy efficient tyres. Energy efficient tyres can reduce fuel consumption, rolling resistance and wet grip. Using S-SBR can improve these characteristics.
Michelin suggests that 10% of original equipment manufacturer (OEM) tyres in 2010 were low-rolling resistance and this will increase to 48% by 2020.
Demand in Europe from the tyre industry has been flat to weak over the past 12 months. European passenger vehicle tyre replacement sales, which account for 70-80% of all tyre sales, were down 6% compared to 2012 figures because of cash-strapped consumers. Demand from non-tyre applications has been healthier.
Despite local SBR oversupply, Europe still faces a lot of competitive pressure from Asia and Russia.
SBR prices dropped significantly from mid-November 2012 to mid-August, as a result of long supply, poor tyre sales and declining feedstock costs.
Primary feedstock butadiene (BD) has been soft since May and contract prices declined €500/tonne from June to August, despite some uptick in September and October’s monthly contract price. This drove down prices on all SBR grades. The SBR 1500 grade price was 24% lower in August than it was in May. BD prices have increased recently because of tightened supply in Europe and lighter feedslates at crackers.
Spot prices remained relatively flat throughout the first half of 2013, and by June prices declined to their lowest level for over three years. Spot 1500 strengthened since September to €1,350-1,400/tonne FD NWE, due to rising BD feedstock costs. Spot 1723 and 1783 remained flat at €1,200-1,300/tonne FD NWE and €1,159-1,250/tonne FD NWE respectively.
SBR is produced by the copolymerisation of butadiene (BD) and styrene. In the emulsion process, producing general-purpose grades, the feedstocks are suspended in a large proportion of water in the presence of an initiator or a catalyst and a stabiliser. A continuous process is employed.
In the solution process, the copolymerisation proceeds in a hydrocarbon solution in the presence of an organometallic complex. This can be either a continuous or batch process. Some manufacturing facilities have swing capacity with polybutadiene rubber.
There was some optimism that SBR demand would improve with increased car sales in western Europe, but market participants remained uncertain about a significant recovery this year and even into 2014.
Trends toward performance S-SBR grades will continue, but until the European economy improves limited demand and high capacity will keep S-SBR utilization rates between 60-70%, according to Germany’s LANXESS.
As a net exporter of S-SBR and butadiene rubber (BR), Europe faces continued competition from Asia and Russia.
BD in Europe is structurally long and will become longer due to new capacities coming onstream over the next two to three years. However, the global market is structurally short and will become more balanced with the onset of new Asian capacities.
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