Asia PBR falls on BD plunge, weak demand amid ample supply

Helen Yan

21-Aug-2014

Focus story by Helen Yan

PBR is a key raw material in the production of tyres for light trucks and commercial vehicles. SINGAPORE (ICIS)–Spot polybutadiene rubber (PBR) prices may continue falling on plummeting cost of feedstock butadiene (BD), and with demand staying weak, market sources said on Thursday.

Spot offers for September PBR shipments have declined by about $100/tonne to $2,100-2,200/tonne CFR (cost and freight) southeast (SE) Asia, they said.

“We have revised our September offers down to $2,100/tonne CFR SE Asia to reflect the feedstock BD price drop,” an Asian PBR producer said.

Feedstock BD has plunged by about 16% or $250/tonne from end-July to $1,300-1,360/tonne CFR SE Asia on 15 August, weighed down by an expected influx into the region of about 20,000 tonnes of deep-sea supply next month, according to ICIS data.

Meanwhile, current demand and supply fundamentals in the PBR market also appear to favour lower prices, with buying indications hovering at around $2,050/tonne CFR SE Asia,  industry sources said.

“Demand is lower-than-expected although traditionally, the third quarter is a high-demand season,” another Asian PBR producer said.

PBR is a key raw material in the production of tyres for light trucks and commercial vehicles.

Thailand and Indonesia are major production centres for global automakers and  tyre manufacturers in southeast Asia.

“Market sentiment is pessimistic amid the geopolitical tensions in Ukraine, Iraq, Syria and Israel and global demand is weak for finished products, which impact on the Asian export- oriented economies,” the producer said.

Compounding the problem is ample supply of deep-sea material, industry sources said.

European PBR producers, wary of the sluggish economic pace at home, have been shipping out more cargoes into Asia, market sources said.

“It is a very competitive and difficult market, and demand has not strengthened as expected,” a trader said.

Asian producers are being forced to lower their prices to compete with European supply, market sources said.

“Spot offers at above $2,000/tonne CFR SE Asia will be difficult to find buyers, “ another trader  said.

A downstream tyre producer has opted to adopt and wait-and-see mode on the PBR market since it is currently “in no hurry to secure additional spot PBR cargo[es]”.

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

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