VINACHEM

Buying interest for spot styrene butadiene rubber (SBR) cargoes in the key China market has started to wane in line with the overall slowdown in trading activity ahead of the Lunar New Year holiday, market sources said on Thursday.

The Lunar New Year falls on 28 January and the Chinese market is closed for a week from 27 January to 2 February.

“Most of our customers have already left for the holiday. It is holiday mood now, there is no buying interest now,” a Chinese rubber trader said.

Spot offers for non-oil grade 1502 SBR have increased to $3,000-3,100/tonne CIF (cost, freight and insurance) this week on the back of rising feedstock butadiene (BD) costs.

Feedstock BD prices have surged by more than 70% since early December 2016 to $2,850/tonne CFR (cost and freight) northeast (NE) Asia on 13 January, according to ICIS data.

However, buying interest for SBR above $3,000/tonne CIF China was limited, with major tyre makers having largely replenished their stocks ahead of the Lunar New Year and most are now out of the market, traders said.

“Traders and tyre makers have already replenished their stocks ahead of the festive holiday, and SBR 1502 offers for import cargoes at $3,000-3,100/tonne CIF China are too high,” a Chinese SBR producer said.

It will be difficult for SBR import prices to climb over $3,000/tonne CIF China, with the dwindling demand also weighing on domestic prices of the material.

Buying indications for SBR non-oil grade have fallen below Chinese yuan (CNY) 23,000/tonne (EXWH) ex-warehouse in east China, against offers at around CNY24,000/tonne EXWH, the Chinese SBR producer said.

Spot prices for non-oil grade 1502 were at $2,700-2,800/tonne CIF China on 18 January, ICIS data showed.

With trading activity in China winding down, a clearer SBR price trend is only expected when players return to the market next month.

“It is uncertain now whether SBR prices can still go higher, we will have a clearer picture of the price trend in mid-February after the holiday,” the same SBR producer said.