SINGAPORE (ICIS)--Styrene butadiene rubber (SBR) prices in Asia are facing upward pressure from rising costs of feedstocks butadiene (BD) and styrene monomer (SM).
On 28 February, non-oil grade 1502 SBR prices were assessed at $1,750/tonne CFR (cost & freight) SE (southeast) Asia, up by $50/tonne from the previous week, ICIS data showed.
Spot offers during the week increased to $1,800-1,850/tonne CFR SE Asia.
“Our margins are being eroded by the rising feedstock BD and SM costs, so we have no choice but to hold out for at least $1,800/tonne CFR SE Asia,” a regional SBR producer said.
Prices of feedstocks BD and SM have been rising since late December 2017.
BD prices have jumped by 20% over roughly two months to $1,420/tonne CFR northeast (NE) Asia on 23 February, while SM has gained 12% over the same period to $1,435/tonne CFR NE Asia, according to ICIS data.
Meanwhile, demand for SBR had waned in February because of the Lunar New Year holiday, which is celebrated in most parts of northeast and southeast Asia.
“February was a slow month as most of the market participants in Asia were staying on the sidelines or had retreated from the market because of the Lunar New Year holiday,” a SBR producer said.
Demand is expected to improve in March, when downstream tyre makers typically tap the spot market to replenish their inventories.
But the tyre makers are resisting higher SBR prices, citing cheaper natural rubber (NR), an alternative raw material.
“NR is much cheaper, about $300/tonne cheaper, so it is difficult to accept SBR price at $1,800/tonne,” a tyre maker said.
NR and SBR are rival feedstocks for the production of tyres for the automotive industry and their prices tend to impact each other.
Tyre makers in Asia have more flexibility in feedstock substitution in their product formulations.
At midday, SMR20 tyre grade NR was at $1,490/tonne FOB (free on board) Malaysia at the Malaysian Rubber Exchange.
Focus article by Helen Yan
Picture: A tyre factory in China's Anhui province. Styrene butadiene rubber (SBR) is used as raw material for the production of tyres for the automotive industry. (Source: VIEW CHINA PHOTO/REX/Shutterstock)