Asia styrene butadiene rubber (SBR) prices may face upward pressure in May if the natural rubber (NR) and feedstock butadiene (BD) prices continue to rise, according to recent reports.
May spot offers for non-oil grade 1502 SBR rose to S$1,480-1,530/tonne CFR (cost and freight) southeast (SE) Asia this week, up by S$80/tonne from the previous month. ICIS data also showed spot non-oil grade 1502 SBR prices were at S$1,400-1,450/tonne CFR SE Asia on 13 April. SMR20 tyre grade NR prices were at S$1,520/tonne FOB (free on board) Malaysia on 15 April, up by more than 30% since the end of February at the Malaysian Rubber Exchange.
A regional SBR producer said that the price of natural rubber is really high so customers may opt to use more SBR.
NR and SBR are substitute raw materials in the production of tyres for the automotive industry.Tyre producers in emerging countries in Asia have more flexibility in raw material substitution and formulation adjustments.
According to Asian SBR producers, margins had been squeezed by rising NR prices as well as higher feedstock BD costs. A northeast Asian SBR producer said that they have to revise their offers up because of the cost pressures from escalating feedstock BD prices that started earlier this year.
Feedstock BD prices rose to an average of S$1,055/tonne CFR northeast (NE) Asia on 15 April, up by nearly 10% since the end of February, according to ICIS data.
However, the price hike may face resistance from the downstream tyre makers, given that SBR prices had risen month-on-month since February this year. In early February, non-oil grade 1502 SBR prices averaged $1,100/tonne CFR SE Asia, ICIS data showed.
The downstream tyre makers are adopting a wait-and-see stance and are reluctant to accept another price increase in light of another price hike for May.Tyre producers have re-stocked their inventories in early March to cover for their requirements for April and May and will only need to buy on a need-to-basis.
Tyre makers in Asia also have the options to procure SBR supplies from other deep-sea suppliers. A tyre producer noted that they can purchase SBR from other deep-sea suppliers in Europe, Middle East, and the US. According to market sources, deap-sea supplies from the said regions are also offered at lower rates at below $1,400/tonne CFR SE Asia.
Source: ICIS