SE Asia SBR may fall further as demand slows down amid Ramadan

SINGAPORE (ICIS)–Spot styrene butadiene rubber (SBR) prices in southeast Asia are likely to fall lower due to waning demand with the start of the Muslim fasting month of Ramadan.

Spot offers for non-oil grade 1502 have fallen this week to $1,600/tonne CFR (cost and freight) southeast (SE) Asia, market sources said.

On 24 May, SBR prices were assessed at $1,700-1,750/tonne CFR SE Asia, down by $50-100/tonne from the previous week. Non-oil grade SBR 1502 prices have shed about 41% since early February, according to ICIS data.

Demand for SBR is expected to slow down in June as downstream tyre plants will be running at lower rates during Ramadan, particularly in Indonesia and Malaysia, which are predominantly Muslim countries.

Indonesia, the biggest economy in southeast Asia; and Malaysia, the fourth largest in the region, observe Ramadan, which began on 27 May.

Meanwhile, declining costs of feedstock butadiene (BD) and weak natural rubber (NR) prices also have a dampening effect on buying sentiment for SBR, market sources said.

“Demand has been very soft due to falling feedstock BD costs. There are no orders even though our offers for the non-oil grade 1502 have been revised down to $1,600/tonne CFR SE Asia,” a northeast Asian SBR producer said.

The average price of feedstock BD has fallen by 24% since late April to $975/tonne CFR SE Asia on 26 May, ICIS data showed.

“Buyers are just waiting for a clearer picture and holding back their SBR purchases due to the uncertainty from declining feedstock BD costs and weak NR price,” a trader said.

NR and SBR are rival raw materials in the production of tyres for the automotive industry, and their prices tend to move in tandem.

“SBR prices have to fall closer to the NR price around $1,500/tonne CFR SE Asia before the buyers will come back, the trader said.

SMR20 tyre grade NR price at the Malaysian Rubber Exchange averaged 153.28 cents/kg ($1,533/tonne) in May.

Focus article by Helen Yan

Picture: Car manufacturing plant in Malaysia. Styrene butadiene rubber (SBR) is used as raw material in the production of tyres for the automotive industry. (Photographer: Shamshahrin Shamsudin/EPA/REX/Shutterstock)