Asia SBR may extend gains in June on limited spot supply

26 May 2014 07:08 Source:ICIS News

Focus story by Helen Yan

SBR is a synthetic rubber used in the production of tyres for the automotive industry.SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) prices in Asia look set to continue rising on tightening spot supply amid reduced output from major regional producers and a dearth of deep-sea cargoes, market sources said on Monday.

Offers for June shipments of non-oil grade 1502 SBR were raised by about $100/tonne to $1,900-2,000/tonne CFR (cost and freight) southeast (SE) Asia and India, they said.

On 21 May, non-oil grade 1502 SBR prices were assessed at $1,800-1,900/tonne CFR  southeast (SE) Asia and CFR India on 21 May, up by $50/tonne from the previous week, ICIS data showed.

European producers are focusing on their domestic market, where they currently generate higher margins, resulting in less exports of SBR into Asia, industry sources said.

“The SBR prices in Europe are at least $100/tonne higher than [in] Asia, so there is no incentive for the European SBR producers to export to Asia,” an Asian SBR producer said.

Another Asian SBR producer said: “There is less Europe-origin SBR material coming to Asia, and this gives us a good opportunity to raise our SBR prices.”

Within Asia, spot SBR supply is also tightening as producers have been cutting output because of weak demand.

SBR is a synthetic rubber used in the production of tyres for the automotive industry.

A number of SBR plants in Asia are running at reduced rates – averaging at around 60% of capacity in China, and at around 80-90% capacity outside of China – according to market sources.

In the near term, SBR producers are expecting demand to pick up in India on improved sentiment, following the landslide victory of the Hindu nationalist Bharatiya Janata Party (BJP) in the general elections that will usher a change of government in the country.

BJP leader Narenda Modia, who is known for his pro-business agenda, will be sworn in as India’s new Prime Minister later on Monday.

“We are very positive about India with the newly elected government having a clear majority, which will make things easier for Mr Modi to carry out his reforms,” an Indian tyre producer said.

India is a major market for spot SBR from Asia and Europe.

“We also expect demand to pick up from tyre makers in southeast Asia as they have to start to restock soon,” a third Asian SBR producer said.

Major Asian SBR producers include Korea Kumho Petrochemical Co (KKPC), LG Chem of South Korea, TSRC of Taiwan and BST Elastomers of Thailand.

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

By Helen Yan