Asia SBR may weaken on new supply in key India market

By Helen Yan

SINGAPORE (ICIS)–Spot styrene butadiene rubber (SBR) prices in Asia may face some downward pressure, as competition in the key Indian market heats up as the country begins commercial production at its first synthetic rubber plant, industry sources said on Monday.

Indian Synthetic Rubber (ISRL) is now producing on-spec material at its new 120,000 tonne/year E-SBR plant in Panipat and has started to make offers to customers in India, according to a company source.

On 17 January, non-oil grade 1502 SBR prices were assessed flat at $1,900-1,950/tonne CFR (cost and freight) India and China since the start of the month, according to ICIS data.

Market players are closely monitoring the situation in India, which is a major spot market for Asian and European SBR producers.

“SBR prices will be under downward pressure as there is oversupply in Asia,” a southeast Asian SBR trader said.

South Korea is a major SBR producer and its product is sold widely in Asia, including India.

“Overall demand is low and we definitely expect prices to weaken when ISRL starts up,” another SBR trader said.

“We are seeing interest in prices at $1,850-1,900/tonne CFR India for non-Korean material,” the trader said.

European and Russian SBR producers also sell to India. China also export its surplus material to India, industry sources said.

Domestic SBR production in India, however, will increase in the second quarter, with the expected start-up of a second plant in Hazira, Gujarat, industry sources said.

The 150,000 tonne/year E-SBR plant is owned by Indian conglomerate Reliance Industries Ltd (RIL).

“We do not expect this year to be easy, and [2014] may even be a more difficult year for SBR makers compared with last year, as demand is slow and there is abundant supply,” a northeast Asian SBR producer said.

SBR is a raw material used in the production of tyres for the automotive industry.

India’s SBR demand has continued to be lacklustre, with the country’s 2013 car sales recording a 10% fall, snapping 11 years of continuous growth, according to data from the Society of Indian Automobile Manufacturers (SIAM).

Indian consumers held their purse strings tightly despite steep discounts offered by car makers last year amid high interest rates, rising fuel prices and a gloomy economic outlook.

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