20 November 2013 06:14 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) values in India look set to fall further with traders rushing to offload stocks following the recent price plunge of feedstock butadiene (BD), industry sources said on Wednesday.
On 13 November, non-oil grade 1502 SBR prices were assessed at $2,000-2,100/tonne (€1,480-1,554/tonne) CFR (cost and freight) India, down $50/tonne at the low end of the price range, ICIS data showed.
“We got many offers from panic-stricken Chinese traders for Korea-origin SBR 1502 at $1,950/tonne CFR basis, and Russian and Chinese SBR are offered at even lower prices,” an Indian synthetic rubber distributor said.
December SBR contracts may be settled at prices that are at least $200/tonne lower than the November prices, the distributor said.
Asian SBR producers have been keeping their offers for SBR 1502 at above $2,000/tonne CFR India this month because of the high cost of feedstock BD in October, industry sources said.
“We have no margins if we drop the SBR 1502 prices to below $2,000/tonne CFR India since we have consumed the feedstock BD at a high price in October,” a northeast Asian SBR producer said.
BD prices averaged $1,660/tonne CFR NE (northeast) Asia last month, according to ICIS data.
At current prices of 1502 SBR, the spread over BD is at $390/tonne, lower than the $400-500/tonne gap that SBR producers require to break even.
BD goes into SBR, which is a raw material used in tyres for the automotive industry.
Downstream tyre makers in India, however, are holding back their purchases for November as they expect SBR prices to fall further in December, taking into account BD’s recent price fall, industry sources said.
BD shed nearly $300/tonne over three consecutive weeks to $1,425/tonne CFR NE Asia on 15 November, according to ICIS, because of an influx of deep-sea BD supply into Asia.
Some 46,000 tonnes of BD from Europe, the Middle East and Brazil are heading into this region through to December, industry sources said.
Continued weakness in the global automotive sector compounds the problem for SBR producers.
“We have no orders for November and demand is really poor in India,” a northeast Asian SBR producer said.
Domestic tyre makers have reduced production amid India's economic slowdown and weakness in its currency - the rupee.
High interest rates, rising fuel prices, as well as a lack of consumer confidence, have continued to hurt the automotive sector in India.
Sales in the domestic market in the current financial year ending March 2014 are projected to decline compared with a previous projection of a 3.9% growth.
In October, passenger car sales in the country fell about 4% year on year, while cumulative sales for the April-October 2013 period declined 4.5% compared with the same period in 2012, according to the Society of Indian Automobile Manufacturers (SIAM).
($1 = €0.74)
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