Asia SBR producers hike July offers on higher BD costs, firm NR

Helen Yan

28-Jun-2016

Bright cars 28 June 2016

SINGAPORE (ICIS)–Major styrene butadiene rubber (SBR) producers in Asia have raised their offers for July cargoes, citing rising cost of feedstock butadiene (BD) costs and firmer natural rubber (NR) prices, market sources said on Tuesday.

Offers for non-oil grade 1502 SBR were quoted at $1,400/tonne CFR (cost and freight) SE (southeast) Asia.

On 22 June, non-oil grade 1502 SBR prices were assessed stable week on week at an average of $1,350/tonne CFR SE Asia, ICIS data showed.

SBR prices had fallen steadily from early May, shedding 10%, before stabilising at $1,350/tonne CFR SE Asia last week, according to ICIS data. Falling BD and NR prices at around the same time had depressed the SBR market, causing a margin squeeze for producers.

But BD prices have since recovered, jumping by 8% from 10 June to $1,000/tonne CFR (cost and freight) northeast (NE) Asia on 24 June, according to ICIS data.

Expectations that BD prices will continue their uptrend are prompting SBR producers to hike prices, market sources said.

“The raw material BD cost has gone up and may go up further, so we have no choice but to revise our offers for non-oil grade 1502 SBR up to $1,400/tonne CFR SE Asia for July cargoes,” the regional SBR producer said.

A Japanese SBR producer is also looking at revising up its July offers, partly on the strengthening of the yen against the US dollar.

“The Japanese yen has strengthened significantly against the US dollar recently and we have to increase our SBR offers for the export sector,” the Japanese SBR maker said.

Meanwhile, rising prices of rival product NR should provide a further lift to SBR prices, market sources said.

NR and SBR are substitute raw materials in the production of tyres for the automotive industry, and their prices tend to move in tandem.

At the Malaysian Rubber Exchange, SMR20 tyre grade NR prices have risen to $1,290/tonne on 27 June, after plunging $370/tonne from late April to $1,230/tonne in mid-June.

“NR prices have rebounded and this will further help push up the SBR price. We also expect demand to pick up after the Muslim fasting month in mid-July,” a major South Korean SBR producer said.

Most southeast Asian countries observe the Muslim fasting month of Ramadan, which started on 6 June will end with the Eid-ul-Fitr holiday. Trading in the region typically slows down during this period.

BD CFR NE Asia, SBR CFR SE Asia 28 June 2016

Top image: Styrene butadiene rubber (SBR) is a raw material for the production of tyres for the automotive industry (Monkey Business Images/REX/Shutterstock)

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