Updated to mid-November 2009
Asian market review by Helen Yan, ICIS pricing
Asian styrene butadiene rubber (SBR) prices for the non-oil grade 1502 rose and fell in the three-month period from mid-August to mid-November, reflecting market uncertainty following the US decision in September to impose punitive tariffs on Chinese tyre imports.
Non-oil grade 1502 SBR prices increased by $150/tonne in the two weeks from mid-August to $1,850/tonne CIF (cost, insurance and freight) China at the end of August as downstream tyre producers stocked up on inventories.
However, non-oil grade 1502 prices fell to $1,800/tonne CIF China in October after the US announcement and dropped further to $1,750/tonne CIF China in November.
Chinese buying interest for SBR imports had waned in the run-up to the week-long National Day holidays in China from 1-8 October and continued to weaken in October and early November amid slowing demand in the fourth quarter.
European market review by Peter Gerrard, ICIS pricing
In August, whilst SBR demand was reported better in Europe, suppliers also pointed to growing demand in other regions. Asia and South America were said to be very active. The former presented selling opportunities for European producers. Despite the near certainty of a big step up in feedstock costs, some said the SBR market lacked clarity and there was also an unusually marked absence of consensus among players.
The fourth quarter rise was generally assessed at around plus €300/tonne on the back of the substantial Q4 hike of €265/tonne for butadiene. However, there remained widespread arrangements for modifying initial settlements to take account of changing circumstances. In some instances, a value had been set only for October, with a supplementary number to be arranged for the remaining two months of the year. In others, a quarterly price had been agreed between parties and these were now subject to further discussion and revision.
From October there was more competition for sales within Europe and less demand for exports. This led to a softening of prices that was aggravated in November by the start of de-stocking for the year-end. However, at €1,270-1,340/tonne, 1500 grade was still valued between €190-240/tonne higher than in mid-August.
US market review by Gene Lockard, ICIS pricing
SBR contract prices in the US for 1502 non-oil grade product reached the mid-80s to low 90s cents/lb during the period of mid-August to mid-November, while 1712 oil-extended grade product was in the upper 70s to mid-80s cents/lb.
While SBR values rose early in the period, it was because of an increase in butadiene values, and not because of an increase in demand, which remained low. When the November BD settlement was rolled over from October, most SBR sellers followed with contract rollovers of their own for November.
Throughout the period, the lacklustre global economy took its toll on the replacement tyre sector and the original equipment manufacturer (OEM) market, the two largest drivers of SBR. The OEM sector, which was particularly hard-hit for most of the year from a lack of new car sales, began to strengthen slightly in the reporting period, despite the expiration of the US government’s “cash for clunkers” programme in the preceding period.
A tariff on low-cost imported tyres from China did lead to price increases from several tyre producers during the period. While SBR sources said there were small gains in the replacement tyre sector when compared to levels earlier in the year, the replacement tyre sector remained weak. A recovery for the SBR market was not expected until possibly the second quarter of 2010.
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Styrene-butadiene rubber
Uses and Outlook
Styrene butadiene rubber (SBR) is the largest volume synthetic rubber. With over 70% being consumed in the manufacture of tyres and tyre products, demand is very much dependent on this sector.
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Styrene-butadiene rubber
Process Technologies
SBR is produced by the copolymerisation of butadiene with styrene in the approximate proportion of 3:1 by weight.
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