Market and product

Spot discussions for styrene butadiene rubber (SBR) in Asia have spiked, driven by strong gains in the feedstocks butadiene (BD) and styrene monomer (SM) markets, industry sources said on Wednesday.

“Buyers [of SBR] are now back and discussions are now ongoing for March shipments and prices are up $50-80/tonne,” a trader said.

Major SBR producers in Asia have hiked their offers by about $100/tonne for non-oil grade 1502 to $1,200-1,250/tonne CIF (cost, insurance and freight) China and CFR (cost and freight) southeast (SE) Asia and India, market sources said.

On 17 February, non-oil grade SBR 1502 prices were assessed at $1,100/tonne CFR SE (southeast) Asia/CFR India; and at $1,075/tonne CIF China, ICIS data showed.

“Feedstock BD and SM costs have gone up significantly and are likely to go up further, so we have no choice but to increase our offers for all regions in Asia to $1,250/tonne, or we will suffer losses,” a regional SBR producer said.

SM and BD prices surged in the week after the Lunar New Year holidays.

The Lunar New Year on 8 February was celebrated in most parts of northeast and southeast Asia, with the Chinese markets closed for a full week on 7-13 February.

On 19 February, prices of feedstock BD increased by $35/tonne week on week to $860/tonne CFR NE (northeast) Asia, while those of another key raw material, SM, rose by $40/tonne to $1,005/tonne CFR NE Asia, ICIS data showed.

Trading activities have picked up momentum this week, with most market players back from the holidays.

SBR buyers are expected to return to the market to build up their depleted inventories, industry sources said.

“Buyers cannot hold off anymore and they need to purchase SBR for their production, and they have to pay higher price,” another trader said.

A second SBR producer said: “Demand has picked up this week as buyers are now booking larger parcels while in the past they tend to hold lean inventories and purchase on a need-to basis.”

Demand for the synthetic rubber has been lacklustre since the start of the year amid the slumping crude oil prices and the global stock market turbulence.

Downstream tyre makers have taken to holding back on their purchases, given the uncertain market outlook, industry sources said.

“January was really terrible month, with all the uncertainty, stock market rout and crude oil falling below $30/bbl, while early February was quiet due to the Lunar New Year holidays,” a rubber distributor said.