SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) prices in Asia may remain on an uptrend in the near term because of limited spot availability amid improved demand, and surging costs of feedstock butadiene (BD).
Offers for June shipments of non-oil grade 1502 increased to $1,900-1,950/tonne CFR (cost & freight) southeast (SE) Asia.
On 30 May, prices were assessed at $1,850-1,900/tonne CFR SE Asia, up by $50/tonne from the previous week, ICIS data showed.
SBR producers have raised their offers due to cost pressures arising from the continued spike in BD prices which severely eroded their margins.
“We have no choice but to raise offers as our margins are now in negative territory,” a regional SBR maker said.
BD prices have surged by 41% since early April to $1,800/tonne CFR northeast (NE) Asia in the week ended 25 May, ICIS data showed.
A number of SBR makers have either cut production or looking at shutting their plants ahead of schedule in the wake of surging BD costs, consequently tightening supply of the synthetic rubber.
In Indonesia, Gajah Tunggal will shut its 75,000 tonne/year SBR plant in Merak in June for about two weeks during the Muslim Eid ul-Fitr or Lebaran holiday in mid-June. The holiday marks the end of Muslim fasting month of Ramadan.
In China, Shen Hua Chemicals will bring forward the maintenance of its 180,000 tonne/year plant in Nantong to July from the original September schedule.
Other SBR producers in Asia including Korea Kumho Petrochemical Co and Taiwan’s TSRC were heard running their plants at reduced rates, market sources said.
Demand, on the other hand, has picked up on the back of re-stocking activities by downstream tyre makers looking to replenish their depleted inventories.
“We were able to close non-oil grade 1502 transactions at $1,850-1,900/tonne CFR basis with tyre makers in Indonesia this week,” a rubber trader said.
The second and third quarters are typically high production seasons for the derivative tyre industry.
Focus article by Helen Yan
Picture: Chery car factory in Anhui province, China. Styrene butadiene rubber (SBR) is used in the production of tyres for the automotive industry. (Source: KeystoneUSA-ZUMA/REX/Shutterstock)