Europe SBR mid-term outlook fairly positive on favourable export scenario, EU BD costs

Source: ICIS News

2018/09/14

LONDON (ICIS)--European styrene butadiene rubber (SBR) mid-term market outlook is mostly positive if upstream European butadiene pricing levels remain competitive and continue to support favourable SBR export trade flows, according to Versalis' marketing manager.

Enrico Lucchese was speaking at the 7th ICIS European Butadiene & Derivatives conference taking place in Munich on 12-13 September.

Certain factors are pointing to an optimistic outlook in the medium term for SBR, despite some viewing tyre demand as slightly lower in the near term.

The tyre sector in Europe drives the majority of SBR demand in Europe.

Overall growth in the European passenger car (PC) tyre market is forecast to grow by around 2% in the next three years, which is expected to support demand.

Emulsion styrene butadiene rubber (E-SBR) is primarily used in traditional passenger tyres and for more general usage whereas solution styrene butadiene rubber (S-SBR) is used for more high performance original equipment (OE) tyres.

While western Europe growth was mostly flat over the last few years, central Europe’s growth in manufacturing is apparent and is a key area for focus with projected growth of just under 4%.

In terms of SBR production nameplate capacity in Europe, there has been little change in western Europe.

Demand in central Europe has outstripped growth seen in the west, mainly driven by increased S-SBR investment.

There has been new tyre capacity in central Europe, which has increased demand but western Europe does hold a bulk portion of S-SBR demand.

Recent news of additional tyre capacity includes plans for a large tyre investment in Serbia from China’s Shandong Linglong Tire Co. The company recently announced they were building a commercial tyre plant in northern Serbia for $994 million.

Nonetheless, the outlook for S-SBR growth in western Europe is for a steady incline, driven by demand from OEM (original equipment manufacturers) and more stringent regulations in tyre labelling.

Lucchese added that western European demand has been slowly recovering after the EU crisis. E-SBR in Europe was mostly flat after the economic downturn but was supported by non-tyre applications and S-SBR demand.

EXPORT MARKET SUPPORTED BY CHEAPER EU BD

European SBR exports grew systematically in the last eight years, increasing by nearly 45%.

This trend, seen in both S-SBR and E-SBR markets, was a “well supported trend even through the years of crisis”.

Asia remains the preferred destination for EU exports with around 92,000 tonnes exported from Europe into Asia along with 53,000 tonnes going to the Americas in 2017 for E-SBR according to Lucchese.

S-SBR followed the same trade flow trend with Asia remaining the preferred destination for material last year and positive net balanced to all regions.

Another trend explored by Lucchese was the role of a positive BD trend of Asia and the US vs. Europe.

More affordable BD in the EU compared with the other regions is supporting a favourable SBR exporting scenario.