FocusAsia SBR may halt falls as makers cut output, eye Europe export

26 March 2014 06:19  [Source: ICIS news]

Focus story by Helen Yan

SBR is a raw material used in the production of tyres for the automotive industry.SINGAPORE (ICIS)--Asia styrene butadiene rubber (SBR) prices may stop declining as producer attempt to tighten regional supply by cutting production and possibly exporting more volumes to Europe, market sources said on Wednesday.

A potential rebound in the prices of feedstock butadiene (BD) is also expected to provide support to SBR prices, they said.
On 19 March, non-oil grade 1502 SBR prices were assessed at $1,800-1,850/tonne CFR (cost and freight) southeast (SE) Asia, down by $100/tonne since 26 February, according to ICIS.

Price of feedstock BD, on the other hand, stood at $1,100-1,150/tonne CFR SE Asia on 21 March, down by nearly $250/tonne from end-February, the data showed.

A number of SBR producers have been withholding any firm spot offers as they expect BD prices to recover, market sources said.

“Our  feedstock BD contract prices were much higher at above $1400/tonne CFR SE Asia in February and our margins will be negative if SBR prices fall to below $1,800/tonne CFR SE Asia,” a southeast Asian SBR maker said.

The sharp fall in SBR prices prompted regional producers to either cut operating rates at their facilities or look at boosting their deep-sea export volumes to tighten the supply in Asia, market sources said.

South Korea’s LG Chem plans to at least double its SBR exports to Europe because of the weak market in Asia, a company source said.

“We plan to export about 2,000-3,000 tonnes of SBR in April,” a company source said.

The company usually ship out a monthly volume of about 1,000 tonnes of SBR to Europe, the source said.

The South Korean company is also planning to cut operating rates or shut down its 145,000 tonne/year SBR plant if the price downtrend is not abated.

“We will cut our operating rates or shut down our SBR plant if prices continue to fall,,” the source said.

Meanwhile, a producer in southeast Asia is also mulling shutting down its 72,000 tonne/year SBR plant if prices fell below $1,800/tonne CFR SE Asia.

“We will consider an unscheduled maintenance for three to four weeks,” a source at the southeast Asian producer said.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
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