India SBR faces downward pressure on BD, SM slump, weak NR prices

Source: ICIS News


SINGAPORE (ICIS)--India’s styrene butadiene rubber (SBR) prices may fall further in the near term because of recent sharp falls in costs of feedstocks butadiene (BD) and styrene monomer (SM), and amid market weakness in rival product natural rubber (NR).

Spot offers from Asian SBR producers for non-oil grade 1502 fell this week to $1,700-1,750/tonne CFR (cost and freight) India.

On 4 October, spot prices of non-oil grade 1502 SBR were assessed at $1,700-1,800/tonne CFR India, down by $50/tonne from the previous week, ICIS data showed.

“Customers do not wish to discuss any purchase as they said they can wait till November,” a rubber trader said.

India’s derivative tyre makers have adopted a wait-and-see stance on the market, with most having covered their SBR requirements ahead of Diwali, the Hindu Festival of Lights, on 19-22 October.

"Tyre makers have covered their requirements for October and market activities will start to wind down soon as the India market will be shut from next week for the Diwali festive holiday," an Indian tyre maker said.

“Suppliers are under pressure to sell their cargoes now, so they have to cut their offers. Buying ideas are below $1,600/tonne CFR India," he said.

Meanwhile, prices of key feedstock BD plummeted to $1,325/tonne CFR NE (northeast) Asia in the week ended 6 October, down by $270/tonne or 17% since mid-September; while those of SM, another feedstock for SBR, had also fallen by about 9% over the same period to $1,240/tonne CFR NE Asia, according to ICIS data.

Price movement in the NR market has also been weighing down on the SBR market. NR prices had declined below $1,500/tonne after hitting $1,700/tonne in September.

NR and SBR are raw material substitutes in the production of tyres for the automotive industry and their prices tend to impact each other.

At midday, the SMR20 tyre grade NR traded at the Malaysian Rubber Exchange stood at 143.55 cents/kg ($1,435.50/tonne) FOB (free on board) Malaysia.

Focus article by Helen Yan

Pictured above: A tyre factory in China. (Source: TopPhoto Corporation/REX/Shutterstock)