SINGAPORE (ICIS)--Asia’s styrene butadiene rubber (SBR) prices may remain on an uptrend for the rest of the month on the back of soaring feedstock butadiene (BD) costs, market sources said on Wednesday.
Fresh spot shipments for non-oil grade 1502 SBR were offered this week at $1,750-1,800/tonne CFR (cost and freight) SE (southeast) Asia.
“SBR prices have been rising week on week due to the relentless feedstock BD price upsurge, and some customers have retreated to wait for a clearer picture,” a trader said.
On 5 October, non-oil grade 1502 SBR was assessed at an average of $1,550/tonne CFR SE Asia, up by $75/tonne from the previous week, according to ICIS data.
SBR prices have increased by about 14% since early August but the spike pales in comparison with BD’s 60% surge over roughly the same period, ICIS data showed.
Based on the last assessed prices, the spread between SBR and BD in southeast Asia has narrowed to $50/tonne. Market sources said that SBR prices must be higher by about $400/tonne compared with feedstock BD for rubber producers to break even.
BD accounts for more than 70% of SBR’s composition and costs, market sources said.
“Our spot offers for the non-oil grade 1502 have increased … in line with the feedstock BD price increase,” a source at a northeast Asian SBR producer said.
A southeast Asian producer has withdrawn its offers as it expects BD prices to rise further.
On 7 October, BD prices were assessed at $1,500/tonne CFR SE Asia, ICIS data showed. Spot prices of BD have been surging since early August because of tight supply, with the upward momentum further bolstered by the late-September outage of Shell’s cracker complex in Singapore. The cracker complex in Pulau Bukom produces 960,000 tonnes/year of ethylene; 450,000 tonnes/year of propylene; and 155,000 tonnes/year of butadiene, according to ICIS data.
Asian SBR producers must hike prices to stem production losses amid the continued spike in feedstock costs, market sources said.
SBR is a raw material for the production of tyres for the automotive industry.
On the demand front, downstream tyre makers are restocking their inventories for the fourth quarter but some of them are considering retreating to the sidelines because of surging BD prices.
“Some buyers are adopting a wait-and-see stance to get a clearer picture of the feedstock BD price trend before they commit to any large SBR purchases,” a trader said.
Focus article by Helen Yan
Picture: Tyre factory in China's Anhui province. Styrene butadiene rubber (SBR) is used in the manufacture of tyres for the automotive industry. (Source: VIEW CHINA PHOTO/REX/Shutterstock)
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