India SBR may fall further on soft feedstock costs, NR market

SINGAPORE (ICIS)–Spot import prices of styrene butadiene rubber (SBR) in India look set to fall further because of lower feedstock costs and soft natural rubber (NR) values, market sources said on Wednesday.

Spot offers for May shipments of non-oil grade 1502 SBR were heard this week at $1,800-1,900/tonne CFR (cost and freight) India, down by $100/tonne from previous quotes.

On 26 April, non-oil grade 1502 SBR prices were assessed at $1,900-2,000/tonne CFR India, according to ICIS.

Declining costs of feedstocks butadiene (BD) and styrene monomer (SM) have been weighing on the market.

BD prices have shed about 20% since 31 March to $1,325/tonne CFR northeast (NE) Asia on 28 April, while SM values declined by 10% over the same period to around $1,090/tonne CFR NE Asia, ICIS data showed.

Consequently, SBR non-oil grade 1502 spot offers at $2,000/tonne CFR India were met with strong resistance from derivative tyre makers, market sources said.

“We expect the SBR 1502 price to drop further in May due to lower feedstock BD and SM costs, and as NR is still much cheaper than SBR,” an Indian tyre maker said.

NR and SBR can substitute each other as raw material in the production of tyres for the automotive industry, as well as in the manufacture of footwears.

Customers in the footwear sector have cut back their consumption of SBR and switched to using cheaper NR, while tyre makers – the major consumers of SBR – are also doing the substitution.

“The NR price is very soft and customers were seeking lower non-oil grade 1502 prices closer to the NR price, which had been hovering at around the $1,600/tonne level,” a supplier said.

Tyre makers in emerging economies in Asia have more flexibility in feedstock substitution in their product formulations.

“The gap between NR and SBR prices has to be narrowed as the downstream tyre makers are holding back their purchases as they expect the SBR 1502 price to drop lower to around the $1,600-1,650/tonne CFR India levels by the end of May,” a trader said.

Focus article by Helen Yan

Picture (top): A car manufacturing plant in Kerala, India. Styrene butadiene rubber (SBR) is a raw material in the production of tyres for the automotive industry. (Source: Sipa Press/REX/Shutterstock)