Asia PBR may extend declines on falling BD, soft NR prices

16 May 2017 05:52 Source:ICIS News

Focus article by Helen Yan

SINGAPORE (ICIS)--Spot polybutadiene rubber (PBR) prices in Asia look set to fall further because of declining costs of feedstock butadiene (BD) and a soft natural rubber (NR) market.

Weak domestic PBR prices in the key China market aggravate the pressure on regional prices, market sources said.

Spot offers for high-cis PBR quoted at above $1,900/tonne CFR (cost and freight) northeast (NE) Asia were met with stiff resistance from downstream tyre makers.

On 11 May, high-cis PBR prices were assessed at $1,950/tonne CFR NE Asia, down by 24% from end-March, ICIS data showed.

Feedstock BD prices had shed nearly 30% over roughly the same period to $1,175/tonne CFR NE Asia on 12 May, according to the data.

“Tyre makers are holding back their PBR purchases and hesitant to re-stock due to the decline in the feedstock BD price and weak NR price,” a northeast Asian PBR producer said.

High inventories of NR – a rival raw material of PBR – at warehouses in Qingdao, China, have also hampered PBR imports.

NR and PBR are substitute feedstocks in the production of tyres for the automotive industry and their prices tend to impact each other.

NR prices have remained soft at around $1,500/tonne level, thus, capping interest for spot PBR cargoes.

“There are abundant NR stocks – more than 200,000 tonnes in warehouses in Qingdao, China – and it may take some time to clear the NR inventories,” a rubber trader said.

Major tyremakers with factories in China, have not been active in the PBR import market due to availability of cheaper local material in the country.

“We will not consider offers above $1,700/tonne CFR NE Asia for PBR imports as we can procure local product equivalent to around $1,650/tonne CFR NE Asia at import parity,” a major tyre maker based in China said.

Asia PBR 16 May

By Helen Yan