Europe SBR June contracts drop on feedstock losses amid bleak demand outlook

LONDON (ICIS)–European styrene butadiene rubber (SBR) contract prices have fallen on the back of lower feedstock costs and concerns over prolonged demand weakness.

For June, SBR sellers found it difficult to recover margins due to the challenging demand conditions and lower feedstock costs.

Feedstock butadiene (BD) prices fell by a double-digit amount in June, and the European styrene June barge contract was assessed at a triple-digit drop from May.

June 1500 dry grade contract prices were assessed at a decrease of €60/tonne at the low end of the range and a drop of €80/tonne at the high, bringing prices to €1,305-1,410/tonne free delivered (FD) northwest Europe (NWE).

June oil extended 1723 and 1783 grade contracts were assessed at a decrease of €40/tonne at the low end and a drop of €50/tonne at the high, bringing both prices to €1,300-1,395/tonne FD NWE.

WEAK TYRES
Tyre demand is weak, or slowing down, across the board.

“Tyre [demand is] still soft; we see a very weak market”, an SBR buyer said this week.

“We are very disappointed … [Volumes and prices are] roughly minus 20% this year compared with the same time last year,” added a reseller.

“[The tyre market is] progressively slowing down rubber demand … in June, versus May and April,” another European SBR source noted.

Challenging conditions persist in the automotive and tyre industries, and global macroeconomic uncertainties continue.

Passenger car registrations across the EU increased in May but
remain lacklustre year on year.

Demand is expected to slow even further in the third quarter, which includes the summer holiday break, as some tyre makers will be undergoing planned shutdowns.

The stock already built up will be drawn upon during this period.

In the spot market, competitive offers remain but there was a reluctance to secure material this week and demand was low.

Most players are waiting for the next monthly BD settlement for a clearer picture, but the weak conditions are expected to continue.

Supply is lengthy, with imports available from overseas, and there are European exports heading to North America, sources said this week.

There was an isolated mention of spot dry grade prices below €1,200/tonne, but this was for lower-specification product.

Prices below the current range were not widely quoted; dry grade spot prices were assessed as stable between €1,250-1,300/tonne FD NWE.

Oil extended spot prices were also assessed as steady at €1,230-1,280/tonne FD NWE.

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Pictured: Tyre factory; SBR demand from that end market remains weak
Picture source: Shutterstock

Focus article by Melissa Hurley