Price and market trends: Asia SBR may halt falls as makers cut output, eye Europe export

04 April 2014 09:33 Source:ICIS Chemical Business

Rise in feedstock butadiene price as well as production cuts support an end to declining prices

Asia styrene butadiene rubber (SBR) prices may stop declining as producers attempt to tighten regional supply by cutting production and possibly exporting more volumes to Europe, market sources said on 26 March.

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

By Helen Yan