China SBR downtrend may continue on cheaper NR, weak demand

SINGAPORE (ICIS)–China’s spot styrene butadiene rubber (SBR) import prices are under downward pressure amid an oversupply of rival product, natural rubber (NR), and weak demand due to declining vehicle sales in the country.

Cars on display in Harbin, China (Source: ImagineChina/REX/Shutterstock)

On 14 November, non-oil grade 1502 SBR prices fell to $1,475/tonne CIF (cost, freight & insurance) China, down by $25/tonne from the previous week, ICIS data showed.

Spot prices have fallen by about 16% from late August, according to the data.

“Natural rubber is abundant and cheaper at around $1,250/tonne compared with non-oil grade 1502 SBR, so there is room for SBR prices to fall lower,” a Chinese SBR maker said.

SBR and NR are feedstocks in the production of tyres for the automotive industry.

Tyre makers in emerging economies have more flexibility in adjusting their product formulations, although the window for feedstock substitution is usually confined to 5-10%, market sources said.

In the key China market, vehicle sales in October declined by 11.7% year on year to 2.38m units, falling for the fourth consecutive month, according to the China Association of Automobile Manufacturers (CAAM).

“Tyre factories in China are running at lower rates due to declining auto sales and the US-China trade war,” the Chinese SBR maker said.

“Chinese consumers are also more cautious this year and holding back their car purchases, given the uncertainty,” he added.

Sales of Chinese tyres to the US, the country’s major export market, have slowed down ahead of the expected spike in US tariffs on the material to 25% in January 2019 from 10% currently.

Focus article by Helen Yan

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