The main drivers of styrene butadiene rubber (SBR) prices are the costs of feedstocks butadiene (BD) and styrene and downstream tyre demand.
In Europe, there is contract and spot trading. Last year, SBR prices reached a record high because of strong tyre demand. However, 2012 is expected to be quieter because of macroeconomic uncertainties and slowing growth in the downstream tyre and non-tyre markets. Tyre demand in Europe is led by the replacement tyre market, and strongly correlates to macroeconomic trends.
In Asia, SBR and natural rubber (NR) prices tend to move in tandem as they are substitutes for each other in the production of tyres for the automotive industry. In Europe, technical restrictions limit the substitution of SBR for NR to about 5% of applications.
China is the largest automotive market in the world and India has strong growth potential. Asian automotive consumption is being fuelled by GDP growth and upward social mobility in China and India. So, demand for SBR, which is a major feedstock for tyre production, is expected to grow significantly in Asia.
Europe is expected to export more SBR volumes to Asia in 2012, given the slowing tyre and non-tyre markets in Europe. This SBR trade flow from Europe to Asia is likely to continue in the long term.
Asian SBR demand and price movements are expected to have a strong influence on European prices.