Chemical Profile: Asia PBR

USES

Polybutadiene rubber (PBR) is polymerized butadiene (BD). One of the first types of synthetic elastomer, or rubber, to be invented, it is very similar to natural rubber (NR) polyisoprene. The main use for PBR is in tyres, with a high proportion of the polymer that is produced going into treads and sidewalls. Its key properties include high elasticity, good wear resistance, excellent abrasion resistance and good flexibility at variable temperatures. PBR also has a major application as an impact modifier for polystyrene (PS) and  acrylonitrile butadiene styrene (ABS) resin. Apart from tyre treads, belts, hoses, gaskets and other automobile parts are made from PBR as it resists cold temperatures better than other elastomers.

SUPPLY/DEMAND

Demand is expected to strengthen in November and remain strong for the rest of the year in 2017. The derivative tyre makers in China tend to run at high rates or build up their tyre inventories towards the end of the year, ahead of the Lunar New Year, which usually falls either in January or February. Asia is a growing automotive market, with China, India and southeast Asia all witnessing reasonable year-on-year growth in the automotive sector and so growing demand for tyres. On the supply side, the PBR plants in Asia are running at full rates to meet the strong demand.
Deep-sea supplies from Europe and the Middle East are also expected to head to Asia to help meet the strong demand.

PRICES

Asia PBR prices are likely to hold steady-tofirm in December due to limited supplies and strong demand. However, the upside potential may be capped by the soft natural rubber (NR) price. Ample supplies of NR had dampened buying sentiment for PBR, with the downstream tyre makers reluctant to accept any significant price hike for PBR in November and December. NR and PBR are substitute raw materials for the production of tyres in the automotive industry and their prices tend to impact each other. Another factor that may temper any PBR price increase is the feedstock butadiene (BD) price. The feedstock BD price had plummeted to around the $1,000/tonne CFR NE Asia level in late October and is expected to bottom out by mid-November. In light of the anticipated rebound in the feedstock BD price from mid-November, Asian PBR producers are holding out for an upward adjustment for December PBR cargoes. However, deep-sea supplies from Europe and the Middle East may limit any significant hike in the PBR price.

TECHNOLOGY

PBR is polymerized BD. Polybutadiene forms by linking many 1,3-butadiene monomers to make a much longer polymer chain molecule. In terms of the connectivity of the polymer chain, BD can polymerize in three different ways, called cis, trans and vinyl. High-cis polybutadiene has a high elasticity and is very popular, whereas the so-called “high trans” is a plastic crystal with few useful applications. The vinyl content of polybutadiene is typically no more than a few percent. In addition to these three kinds of connectivity, polybutadienes differ in terms of their branching and molecular weights. The catalyst used in the production determines the type of polybutadiene product. Using cobalt gives branched molecules, resulting in a low-viscosity material that is easy to use, but its mechanical strength is low. Neodymium gives the most linear structure (and
therefore higher mechanical strength) and a higher percentage of 98% cis. Other less used catalysts include nickel and titanium.

OUTLOOK

Market players expect the PBR price to rebound in late November or early December, on the back of an uptick in the feedstock BD price. The feedstock BD price is expected to bottom out in November and rebound in late  November or early December. Demand for PBR is also expected to pick up in December, with the derivative tyre makers in China building up their inventories ahead of the Lunar New Year in February 2018. Demand for PBR had been sluggish in October due to the National Day and mid-Autumn festive holidays in China and Diwali festive holiday in India. However, the NR price is also a key factor in determining the price outlook for PBR as both their price movements tend to impact each other.