Corrected: Asia SR may fall further on feedstock BD price, trade war fears

06 April 2018 03:26 Source:ICIS News

Correction: In the ICIS news story headlined “Asia SR may fall further on feedstock BD price, trade war fears” dated 6 April 2018, please read in the first paragraph …’Asia synthetic rubber…’ instead of ….'Asia styrene rubber’….. A corrected story follows.

SINGAPORE (ICIS)--Asia synthetic rubber (SR) prices may face more downward pressure because of declining key feedstock butadiene (BD) cost and cheaper natural rubber (NR) price.

Fears of a looming trade war between the US and China, the world’s two largest economies, have further dampened market sentiment and weighed on demand for synthetic rubber in Asia.

“Sentiment is very weak and buyers are cautious and holding back their purchases. I don’t see any optimism for the synthetic rubber market in this quarter,” a synthetic rubber trader said.

On Thursday, US President Donald Trump proposed another additional $100 billion tariffs on China, intensifying tensions with Beijing.

On Wednesday, China decided to increase tariffs by 25% on 106 products originated from US, with the chemicals sector one of the key targets of the measures, according to a statement from China’s Ministry of Finance on Wednesday.

Spot prices of styrene butadiene rubber (SBR), polybutadiene rubber (PBR) and acrylonitrile butadiene rubber (NBR) fell this week because of declining feedstock BD and lower NR prices amid escalating tensions between the US and China.

The key feedstock BD price fell to $1,325/tonne CFR (cost and freight) northeast (NE) Asia on 30 March, down by $80/tonne from the previous week, ICIS data showed.

Spot prices of non-oil grade 1502 SBR fell to $1,600-1,650/tonne CFR (cost and freight) southeast (SE) Asia this week, down by $50/tonne from the previous week, ICIS data showed.

Apart from falling feedstock BD cost, the downstream tyre makers are seeking lower SBR and PBR prices because of cheaper NR.

NR is substitute feedstock for both SBR and PBR for the production of tyres for the automotive industry, and their prices tend to impact each other.

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

“NR is much cheaper at around $1,350/tonne, which is at least $400-500/tonne cheaper compared with PBR, so tyre makers will certainly press for lower PBR prices,” a rubber trader said.

Spot prices of high-cis PBR fell to $1,750-1,850/tonne CFR SE Asia, down by $25/tonne from the previous week, ICIS data showed.

“Buying sentiment is really weak and PBR prices are facing a lot of downward pressure,” a PBR supplier said.

NBR, another synthetic rubber product, has also seen its price under downward pressure in Asia, including India.

A cautious and wait-and-see stance had weighed on demand amid fears of a trade war between the world’s two largest economies, market sources said.

Spot prices of NBR deropped to $2,450-2,500/tonne CFR India, down by $50/tonne from the previous week, ICIS data showed.

“NBR sales have dropped significantly this month in India. The buyers are just holding back their purchases due to the uncertain market outlook and weak market sentiment amid all this talk of a trade war,” a rubber trader said.

Focus article by Helen Yan

By Helen Yan