US October SBR contracts, spot prices up on surge in BD

HOUSTON (ICIS)–US October contract prices for both grades of styrene butadiene rubber (SBR) were assessed higher on Wednesday, tracking increased feedstock costs.

Spot prices for SBR also increased, although that could be short-lived given weaker overseas values.

For October SBR contracts, 1502 non-oil grade material rose by 7.25 cents/lb ($160/tonne) to 80.25-87.25 cents/lb, while 1712 oil-extended grade rose 7.50 cents/lb to 76.50-85.50 cents/lb.

These increases matched the typical 70-75% pass through of upstream butadiene (BD), which increased by 10 cents/lb in September. Feedstock styrene prices also increased in September.

Supply tightened throughout September for SBR, mostly because of lost production in the US Gulf following Hurricane Harvey.

Demand was mostly steady, and SBR supply has improved heading into October, easing margin pressure on buyers.

In the spot market, 1502 values were assessed up by 8 cents/lb to 79-90 cents/lb, and 1712 values were assessed up by 6-7 cents/lb to 76-83 cents/lb.

This increase is likely to be short-lived, as overseas values for SBR and BD are tumbling in Asia because of pressure from natural rubber.

Sources said Asian SBR producer margins have collapsed on the decline in prices, which is likely to push them to increase exports to the US.

However, fourth quarter demand is expected to be softening on seasonal factors, so pressure form imports could be minimal.

Pressure on SBR prices for the rest of October is likely to come from weaker US BD spot and contract prices.

Major North American SBR producers include Goodyear Tire & Rubber, Lion Elastomers and Dynasol Elastomers.