Trade sources said European styrene butadiene rubber traders and producers are looking to increase their May offers by a minimum of EUR35/mt(metric tonne) in a bid to hold on to the higher than EUR500/mt margin over butadiene reached in early April.
A margin of more than EUR500/mt is needed by the producers in Europe to break even. The SBR/butadiene spread in April stood at EUR515/mt.However, according to sources, present global demand for SBR is weak.
One of the largest traders in Europe said they want to demand a rise of EUR50 for SBR [May offers over April offer] as feedstock butadiene is currently tight.While another trader said the SBR offers would be raised by a minimum of EUR35/mt.
Butadiene for May settled at EUR620/mt FD (free delivered) NWE, up EUR35 from April. SBR 1500 and 1502 grades, two of the largest traded synthetic rubber grades globally, were last assessed at EUR1,100/mt FD NWE. The assessment was flat week on week but up EUR100 from the assessment in the last week of March.
According to a producer, the butadiene market in Europe is currently tight following consistent shipments made to Asia, and it is not easy for a SBR producer to find a spot butadiene cargo if he or she wants it.
About 50,000 mt of European butadiene has been shipped to Asia over the past four months according to estimates. Asia is currently seen demanding several olefins cargoes on ongoing cracker turnarounds in the country.
The Platts market data showed that even with the SBR-butadiene spread high through April, the spread in early 2016 on an average has registered lower values on a yearly basis. Platts market data also showed that the spread between SBR 1500 and butadiene prices has fallen 14% over the first four months of 2016 compared with 2015. The SBR/butadiene spread has fallen from an average of EUR529/mt in the first four months of 2015, to EUR454/mt in the same period of 2016.
Source: Platts