Asia PBR may extend gains on rising BD cost, limited supply

Focus article by Helen Yan

SINGAPORE (ICIS)–Polybutadiene rubber (PBR) prices in Asia may remain on an uptrend on the back of rising cost of feedstock butadiene (BD), and limited availability of spot cargoes, market sources said on Friday.

Spot offers for high-cis PBR have increased to $1,600-1,700/tonne CFR (cost and freight) northeast (NE) Asia, they said.

On 15 September, high-cis grade PBR was assessed at $1,550-1,600/tonne CFR NE Asia, ICIS data showed.

“We will start discussions for October cargoes next week, and anticipate higher PBR prices, given the surge in the feedstock BD price,” a downstream tyremaker said.

Spot PBR prices have risen by about 10% from early August, but the pace of increase has lagged behind the surge in feedstock values. BD surged 21% over roughly the same period to $1,180/tonne CFR NE Asia on 9 September, ICIS data showed.

“We have no choice but to increase our October offers because our margins have been eroded due to cost pressures from the spike in the feedstock BD price,” an Asian PBR producer said.

Also exerting pressure on prices is the expected tightening of PBR supply in Asia because of scheduled plant turnarounds next month, market sources said.

Zeon Corp is slated to shut its 55,000 tonne/year plant in Tokuyama, Japan, for two months up to mid-November, while Korea Kumho Petrochemical Co (KKPC) is scheduled to shut its 360,000 tonne/year plant in Yeosu, South Korea, for about three weeks in October for maintenance.

In China, Sinopec Shanghai Gaoqiao’s 120,000 tonne/year PBR plant was permanently shut earlier this year due to overcapacity.

Most PBR producers in the region have been running their facilities at low capacity, market sources said.

“We have been running at reduced rates of around 40-50% this year due to the weak market conditions,” another Asian PBR producer said.

Demand may pick up soon as downstream tyre makers are expected to restock on raw material, according to PBR producers.

“We expect demand to improve in the coming weeks and the downstream tyre makers have to replenish their dwindling inventories,” a rubber distributor said.