Asia PBR demand slows down ahead of Lunar New Year holidays

SINGAPORE (ICIS)–Spot polybutadiene rubber (PBR) in Asia halted their uptrend as demand has started to slow down, with players retreating from the market ahead of the Lunar New Year holidays.

On 1 February, high-cis grade PBR prices were assessed unchanged at $1,750-1,850/tonne CFR (cost & freight) SE (southeast) Asia from the previous week. In January, prices had increased by $100/tonne, according to ICIS data.

Offers during the week were raised by $50-100/tonne to $1,850-1,900/tonne CFR SE Asia but were met with limited buying interest.

“Demand has started to slow and there are fewer enquiries for spot cargoes as most of the downstream tyre makers have largely covered their first-quarter requirements from contractual volumes,” a southeast Asia-based producer said.

The Lunar New Year, which is on 16 February this year, is celebrated in most parts of northeast and southeast Asia, with the key Chinese market due to be on holiday for a full week from 15-21 February.

PBR sellers have been hiking prices citing rising costs of feedstock butadiene (BD).

On 26 January, spot BD prices have increased to $1,350/tonne CFR NE (northeast) Asia, up by 15% since 22 December 2017, ICIS data showed.

But PBR demand has turned lacklustre, further weighed down by ample and cheaper supplies of natural rubber (NR), an alternative raw material in tyre production.

“NR is only around $1,500/tonne, which is much cheaper compared with PBR, so it will be difficult to accept the price hikes for PBR,” a tyre maker said.

Tyre makers in Asia have more flexibility in feedstock substitution in their product formulations.

PBR demand in the key China market has also waned due to cheaper domestic supplies.

“Apart from demand slowing down due to the coming Lunar New Year holidays, there is a big gap between local price and import price, so spot interest for February imports will be limited,” a Chinese rubber trader said.

“Local PBR supplies are available at around or below $1,700/tonne CFR NE Asia equivalent, so there will not be much spot appetite for PBR imports, which are more expensive, ” a tyre producer based in China said.

Focus article by Helen Yan