Price and market trends: China SBR downtrend may persist on weak demand, falling BD

22 November 2013 09:58  [Source: ICB]

Domestic styrene butadiene rubber (SBR) prices in China may continue to decline during the weeks ahead, weighed down by sluggish demand and declining values of feedstock butadiene (BD), industry sources said on 14 November.

On 13 November, spot prices averaged yuan (CNY) 12,800/tonne ($2,102/tonne) EXWH (ex-warehouse) east China, down by about CNY800/tonne or 6% from the start of the month, according to Chemease, an ICIS service in China.

Some market players indicated that CNY12,000 could be the floor price for SBR.

Most traders have run out of SBR inventories in October and decided to retreat to the sidelines because of the uncertain market outlook, an industry source said.

Falling prices of feedstock butadiene (BD) are also dragging down SBR values, market sources said.

BD has been falling since mid-October, plunging by 17.5% to average CNY10,600/tonne DEL (delivered) east China on 13 November, Chemease data showed.

Demand for feedstock BD has been weak in China as downstream SBR and butadiene rubber (BR) plants have been running at reduced capacity, industry sources said.

BD is the raw material used in the manufacture of synthetic rubber such as SBR and BR, that go into tyres for the automotive industry.

China’s SBR facilities are running at an average rate of 57% this month, up from 51% in end-October, following plant restarts.

Fushun Petrochemical is operating its 200,000 tonne/year SBR plant in Liaoning province at half its capacity after restarting the unit early this month.

The plant was shut for maintenance, company sources said.

Lanzhou Petrochemical’s 150,000 tonne/year SBR plant in Gansu province, on the other hand, resumed production in end-October and is currently running the plant at around 67% of capacity,

Increased supply will likely cast a cloud on the domestic SBR market as demand is still weak, industry sources said.

Some suppliers are considering cutting their SBR offers if BD prices continued to decline.

By: Sunny Pan

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