OUTLOOK ’14: Asia SBR prices seen soft in Q1 on ample supply

02 January 2014 03:13  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Asia styrene butadiene rubber (SBR) prices are likely to remain flat in January but may recover in February after the Chinese New Year holidays as buyers return to the market after the festive holidays to re-stock, industry sources said.

Chinese New Year falls on 31 January and the key Chinese market will  be closed for at least one week, although some factories may shut for up to two weeks for the festive holidays, industry sources said.

However, the SBR prices are unlikely to show any sharp significant increases in the first quarter of 2014 because of abundant supply and stiff competition from deep-sea suppliers, industry sources said.

Asian SBR makers are targeting $2,000/tonne (€1,460/tonne) CIF (cost, freight, insurance) China for January shipments of non-oil grade 1502 SBR, but industry players including both sellers and buyers said that this price level will be difficult to achieve in January, given that deep-sea supply is abundant at lower prices.

About 10,000 to 12,000 tonnes of SBR from Europe, the US and Russia are exported to China each month, providing stiff competition to the Asian SBR producers, industry sources said.

“Asian SBR makers will find it difficult to raise their non-oil grade 1502 SBR prices to $2,000/tonne CIF China as there is abundant deep-sea supply from Europe and the US, which are priced about $50-100/tonne lower than Asia-origin material because of cheaper feedstock butadiene costs in these countries,” a Chinese SBR producer said.

Non-oil grade 1502 SBR prices averaged $1,950/tonne CIF China on 18 December, ICIS data showed.

“We expect SBR prices to remain stable in the first quarter of 2014 and do not expect any significant increases in prices as demand from the tyre makers remains stable, and supply is ample,” a major downstream tyre maker said.

Apart from the key China market, market players are also closely watching the Indian market, which will see two new SBR plants with combined capacities of 270,000 tonnes/year coming on stream.

In India, Indian Synthetic Rubber Ltd (ISRL) inaugurated its new 120,000 tonne/year SBR plant on 29 November 2013 while Reliance Industries (RIL) is expected to start up its new 150,000 tonne/year SBR plant in the second quarter of 2014.

The additional SBR capacities in India will invariably see competition heating up further in Asia, as industry players expect India to impose anti-dumping duties on Asian and European SBR product in a bid to protect their local producers.

“This  means that the European and Asian SBR makers may have to look elsewhere to sell their product, and with supply exceeding demand, it will be difficult to see SBR prices climbing up significantly in the first quarter of 2014,” a northeast  Asian SBR maker said.

“The first quarter of 2014 will be different from the same period last year. I remember SBR prices rising sharply after the Chinese New Year holidays in February and then falling sharply soon after that, ” a major tyre maker based in China said.

In 2013, non-oil grade 1502 SBR prices were at $2,250/tonne CIF China on 2 January, subsequently surging to $2,475/tonne CIF China on 20 February before  dropping to $2,250/tonne CIF China on 27 February, ICIS data showed.

Chinese New Year in 2013 fell on 10 February.

“Traders and distributors will be more cautious this year and will not bet on a sharp recovery in prices after the Chinese New Year, as end-user demand is expected to remain stable and the market outlook is uncertain for 2014,” a downstream tyre maker said.

($1 = €0.73)

By: Helen Yan
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