Asia PBR prices face downward pressure on waning demand and cheaper NR

SINGAPORE (ICIS)–Polybutadiene rubber (PBR) prices in Asia may face downward pressure from waning demand and cheaper natural rubber (NR) amid uncertainty stoked by the global stock market turmoil.

“PBR prices above $1,850/tonne are too high compared with natural rubber at $1,500/tonne. Buyers are also more cautious, and holding back their purchases due to the Lunar New Year holiday and global stock market volatiility,” a rubber trader said.

NR is a substitute feedstock for PBR, which is used for tyre production in the automotive industry, and their prices tend to impact each other.

Wall Street’s Dow Jones slumped 4.6% on Monday, its biggest drop since August 2011. The sharp drop triggered massive losses in stock markets in Europe and Asia the following day, although the markets have since rebounded.

Asian PBR makers had hiked their offers for fresh spot shipments of high-cis grade to $1,850-1,950/tonne CFR SE Asia due to rising feedstock butadiene (BD) cost which averaged $1,400/tonne CFR northeast (NE) Asia on 2 February.

“We are keeping our offers for PBR above $1,850/tonne CFR SE Asia due to the feedstock BD cost, but we may consider adjusting our offers down if there are firm enquiries and buyers are serious about purchasing,” an Asian PBR producer said.

Demand is expected to remain weak in view of the upcoming Lunar New Year holiday.

Lunar New Year is celebrated in several countries in Asia, including Indonesia, Malaysia, Singapore, Vietnam, Taiwan and South Korea, with the key Chinese market shut on 15-21 February.

“‘With NR weaker and the current bearish market sentiment, there are no enquiries at all this week, it is really very quiet. We will wait and see as the buyers have retreated for the upcoming Lunar New Year holiday,” another Asian PBR producer said.

High-cis grade PBR was assessed at $1,750-1,850/tonne CFR (cost and freight) southeast (SE) Asia on 1 February, up by $100/tonne from the previous month, ICIS data showed.

Top image: PBR is used in production of tyres. (LAT Photographic/REX/Shutterstock)

Focus article by Helen Yan