Asia SBR may fall on oversupply, falling BD, NR prices

SINGAPORE (ICIS)–Styrene butadiene rubber (SBR) prices in Asia may still have room to fall because of abundant supply, stagnant demand amid weakening natural rubber (NR) and feedstock butadiene (BD) markets, industry sources said on Thursday.

Major regional producers are keeping their offers for non-oil grade 1502 SBR firm at $1,200/tonne CFR (cost and freight) southeast (SE) Asia for December spot shipments, citing limited spot availability.

But spot offers for deep-sea SBR 1502 cargoes from Russia and Iran were heard available at $1,000-1,050/tonne CIF (cost, freight and insurance) China, which may prompt Chinese traders to offload these cargoes at competitive rates in southeast Asia, market sources said.

“The approach[ing].. fiscal year-end may prompt Chinese traders to clear their SBR stocks and export them to southeast Asia in a bid to ease their [tight] cash flow,” a trader said.

Apart from the influx of lower-priced deep-sea cargoes, SBR cargoes from India were also heard available at below $1,100/tonne CFR SE Asia, market sources said.

On 25 November, non-oil grade SBR 1502 was assessed at $1,050-1,150/tonne CIF China, and at $1,100-1,180/tonne CFR SE Asia, according to ICIS data.

Asia’s abundant SBR supply has prompted regional producers to lower their offers to around $1,150/tonne CFR SE Asia to retain market share, but market weakness in rival product NR could further drive down prices of the synthetic rubber, market sources said.

Downstream tyre makers have been taking up the lower-priced NR instead of SBR, they said.

NR and SBR are interdependent raw materials in the production of tyres for the automotive industry, with their prices tending to move in the same direction.

SMR 20 tyre grade NR, which is traded at the Malaysian Rubber Exchange, averaged 117.81 US cents/kg so far in November from 125.90 US cents/kg in October.

Tyre makers in emerging economies have more flexibility to adjust their formulations to substitute NR with SBR, and vice versa, market sources said.

Meanwhile, falling prices of feedstock BD are also exerting downward pressure on the Asian SBR market, industry sources said.

BD prices fell to an average of $700/tonne CFR northeast (NE) Asia on 20 November, down by 13% or $100/tonne from 23 October, ICIS data showed.

“With all these downside factors, I don’t see any bottom for the SBR price,” a trader said.

However, major Asian SBR makers are of the view that SBR prices have hit bottom and will likely rebound next month on re-stocking activities for January shipments.

“We expect demand to improve in December and prices to rebound,” an Asian SBR maker said.

Focus article by Helen Yan

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