Platts reports, “Optimism about improving tire demand appears to be fading as tire manufacturers nominated lower feedstock emulsion styrene-butadiene rubber contractual volumes in July as tire sales fell, market sources said this week. Weak replacement tire figures were described as disappointing, sources said. According to Michelin’s first quarter 2014 figures, passenger car tire sales were down EUR 62 million ($84 million) or 2.4 percent, to EUR 2.52 billion, from the first quarter of 2013 figure of Eur 2.582 billion.
Truck tires fell EUR 15 million or 1 percent to EUR 1.462 billion, down from EUR 1.477 billion in the same period. “[The] original [equipment] sector has done halfway okay, but the replacement sector is not storing at the moment, it continues to be relatively weak,” a trader said. The replacement tire equipment sector represents around 75 percent of the global market and is the most important tire element, while original equipment, or tires fitted to new cars, represents the remaining 25 percent.
In addition, a combination of a relatively strong euro compared with the dollar, at around $1.36, has recently kept ESBR rubber imports competitively priced, sources said. As a result, sources confirmed this week that tire makers would be taking less SBR in terms of monthly contractual volumes on the expectation of a decline in demand in the second half of the year. “The tire guys are saying that they have contracts for maximum-minimum quantities, but some of those tire makers can’t take even the minimums.
[We are approaching] the first week of July and the start of August, so they don’t need the material and don’t want to hold it in stock as prices could come down in August,” the trader said. Such comments echoed those of one principal Northwest European synthetic rubber producer who said in late June that tire makers, the most important segment for SBR, were reducing offtake from July. “I’m expecting certain GDP figures that will come up in the near future [and] they are not as positive as [previously] forecast.” the producer said. “The same tire makers only a few months ago told me that they saw relatively good demand, so they don’t want to inflate their stocks. They have given me some indications that they will take less SBR. Maybe not in July, but from July, and at a slight revision.”
Selling pressure was seen on the benchmark European 1502 spec emulsion styrene butadiene this week as producers lowered offers on a combination of reduced demand and availability of competitive imports. ESBR offers were reported at EUR 1,435-1,445/mt FD NWE by one producer this week, which compared with the lowest offers of EUR 1,450/mt last week. The 1502 grade inland truck parcels were assessed at EUR 1,435/mt FD NWE last week.
One Northwest European producer that refused to lower its prices from EUR 1,480-1,500/mt in July was confident that overall prices would not fall. “There are companies that are buying on the low levels. [But] it won’t be a crash like in 2009, just a tightening of the belt. I would say that the tire companies will not produce on Sundays and produce half days on Saturday,” another producer said.