Asia SBR may extend declines on weak demand, falling BD

Helen Yan

21-Nov-2014

Focus article by Helen Yan

SBR is used in the production of tyres of the automotive industry.SINGAPORE (ICIS)–Styrene butadiene rubber (SBR) prices in Asia may continue to fall in the coming weeks because of sluggish demand and declining cost of feedstock butadiene (BD), market sources said on Friday.

On 19 November, non-oil grade 1502 SBR prices were assessed at $1,700-1,750/tonne CFR (cost and freight) southeast (SE) Asia, down by $50/tonne from the previous week, according to ICIS data.

SBR producers have lowered their spot offers this week as cost of feedstock BD weakened, and amid ample supply available in the market, industry sources said.

“We are reducing our SBR non-oil grade 1502 prices by $50/tonne in line with the lower feedstock BD costs,” a  northeast Asian SBR producer said.

Spot prices of feedstock BD averaged $1,050/tonne on 14 November, representing a $465/tonne or 30.5% decline from early-September levels, ICIS data showed.

Weekly average BD prices fell to as low of $1,025/tonne CFR NE Asia on 24 October. Prices rose to $1,075/tonne CFR NE Asia before retreating by $25/tonne last week, according to the data.

Meanwhile, demand for SBR is waning as downstream tyre producers intend to keep lean inventories by the end of the year, market sources said.

“We do not intend to build our inventories and have no pressure to purchase any large spot volumes during this  seasonal lull period,” a southeast Asia-based downstream tyre producer said.

Meanwhile, spot availability of lower-priced deep-sea material from Europe is also weighing on demand for Asian SBR, market sources said.

“We have spot offers for European SBR at competitive rates. We can easily procure them as well – on top of Asian product – at short notice, as supply is abundant,” the downstream tyre maker said.

SBR is used in the production of tyres of the automotive industry.

In southeast Asia’s major automotive production centres of Indonesia and Thailand, car sales have been sluggish amid economic pressures.

Motor vehicle sales in Indonesia for January-September 2014 stood at 932,943 units, up by 2.7% year on year, while those in Thailand slumped 37.3% over the same period to 648,410 units, according to data from the ASEAN [Association of Southeast Asian Nations] Automotive Federation (AAF).

Indonesia posted a third-quarter GDP growth of 5.01% – the slowest recorded in five years and represents a deceleration from a 5.12% pace recorded in the preceding quarter.

Thailand, which has been riddled with political uncertainty, posted a 0.6% economic growth in the September quarter, a slight improvement from a 0.4% expansion recorded in the previous quarter.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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