Asian SBR Prices to Fall Further, Predict Manufacturers

Asian based tyre manufacturers and producers of styrene butadiene rubber (SBR) believe regional prices for the commodity can fall even further beyond the 40 per cent experienced in November. While spot prices to China for non-oil grade 1502 dropped to around US$1,500 to $1,600 a tonne in mid November, market sources speculate the going price could reach as low as $1,100 to $1,200 a tonne by the year’s end.

One tyre manufacturer has been reported as stating there is room for prices to fall another $400 a tonne by the end of 2008, and due to the global recession and slack new car sales it doesn’t expect demand to recover. Prices for domestic non-oil grade 1502 prices reached their peak in July 2008 at around RMB 26,000 (£2,544) a tonne, but since that time prices have more than halved. And tyre and rubber manufacturers are anxious of even worse times ahead should any of the US ‘big three’ auto manufacturers fail in their bid to remain viable.

Although China’s domestic vehicle manufacturers have not been impacted as much as their US counterparts, a number of manufacturers have asked the Chinese government for incentives such as lower taxes to boost domestic car sales, which have slowed down in recent months. According to data from the China Association of Automobile Manufacturers, car sales in China slowed to 11 per cent in the first ten months of the year, down from 18.5 per cent a year earlier.

Further weighing down the price of SBR is the depreciation of Korea’s won against the US dollar. The stronger greenback has pushed some Korean SBR producers to offer huge discounts, and according to one trader, tyre manufacturers are holding off making purchases while Korean suppliers are offloading material to ease their dollar cash flow. Recent sharp falls in the feedstock butadiene and styrene monomer have added also to the downward price pressure.