Asia SBR downtrend to continue as buyers retreat amid NR slump

SINGAPORE (ICIS)–Styrene butadiene rubber (SBR) prices in Asia are being weighed down by the continued market slump of rival product natural rubber (NR), industry sources said on Wednesday.

Downstream tyre makers are holding back purchases as the downtrend in raw material prices look set to continue, they said.

On 18 May, non-oil grade 1502 SBR prices were at $1,430-1,500/tonne CFR (cost and freight) southeast (SE) Asia on 18 May, ICIS data showed.

SBR and NR are interdependent substitute raw materials in the production of tyres for the automotive industry.

“NR prices have tumbled by more than $300/tonne in the past month, so we expect SBR prices to fall for June shipments,” a downstream tyre producer said.

SMR20 tyre grade NR prices were at $1,240/tonne at the Malaysian Rubber Exchange on 24 May, down from $1,600/tonne in late April.

“We expect SBR non-oil grade 1502 price to drop below $1,400/tonne CFR SE Asia for June shipments in view of the huge drops in the NR price,” a tyre producer said.

A trader said: “The tyre makers will leverage on the NR price drop to bargain for a substantial discount for June cargoes.”

So far, however, major Asian SBR producers have maintained their offers for June-shipment non-oil grade 1502 at $1,450-1,500/tonne CFR SE Asia.

“There is no change in our offers for June shipments of non-oil grade 1502, we will keep offers stable despite weakened NR price,” an Asian SBR producer said.

Substitution of raw materials in producing tyres is not that easy, according to regional SBR producers.

“Tyre makers cannot just easily change their formulations and substitute SBR with NR as there are certain safety standards and technical specifications tyre makers to comply with,” a northeast Asian SBR producer said.

Focus article by Helen Yan

Top image: SBR and NR are interdependent substitute raw materials in the production of tyres for the automotive industry. (Photographer: Bernard/imageBROKER/REX/Shutterstock)