Asia SBR price uptrend likely in April but NR may cap upside

Focus story by Helen Yan

SINGAPORE (ICIS)–Asia styrene butadiene rubber (SBR) prices may face upside potential in  April, following the rebound in the feedstock butadiene (BD) prices, but the upside may be capped by the soft natural rubber (NR) prices, market sources said on Thursday.

Spot offers for non-oil grade 1502 SBR rose to $1,850-1,900/tonne CFR (cost and freight) southeast (SE) Asia this week after the feedstock BD spot prices rebounded last week.

“We have increased our offers for April by $50-100/tonne because of the rebound in the feedstock BD prices, which we expect to rise further this month,” a southeast Asian SBR maker said.

Feedstock BD prices rebounded to $1,200/tonne CFR SE Asia on 28 March, up by $75/tonne from the previous week, after falling week-on-week since 21 February, according to ICIS.

Feedstock BD prices fell by $300/tonne from $1,425/tonne CFR SE Asia on 21 February to $1,125/tonne CFR SE Asia on 21 March, ICIS data showed.

“Our margins will be eroded from the higher feedstock BD cost and there is no choice but to increase our offers by $50-100/tonne for April,” a northeast Asian SBR producer said.

However, there has been resistance to any significant SBR price hikes because of the soft natural rubber (NR) prices.

NR and SBR are substitutes for each other in the production of tyres for the automotive industry and tyre makers in emerging markets have more flexibility in formulation changes.

SMR20 tyre grade NR prices closed at $1,888/tonne FOB Malaysia on 2 April at the Malaysian Rubber Exchange.

SMR 20 NR prices fluctuated between $1,860-1,980/tonne FOB Malaysia in March.

“Customers are not keen to purchase SBR 1502 at above $1,850 CFR SE Asia due to the soft NR prices,” a trader said.

“NR prices are expected to remain soft in April because of oversupply and the downstream tyre makers will use the soft NR prices to push down the SBR prices,” the trader added.

SBR 1502 prices should be at least $100/tonne lower than NR prices.

The weak macro-economic conditions in Southeast Asia have also dampened buying sentiment.

“Customers are holding back their purchases and adopting a wait-and-see stance. Buying sentiment is weak in this region, with Thailand still mired in a prolonged political stalemate and Indonesia having the presidential elections in July this year,” another trader said.

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