Tyre Producers Now Paying for BR Monthly

A number of tyre makers have reportedly opted to settle their Asian butadiene rubber (BR) contracts on a monthly basis amidst weak demand causing a volatile pricing environment. According to a news report published on icis.com, BR contracts in Asia are usually settled on a quarterly basis. “BR January spot prices have plunged to around $1,100/tonne (€836/tonne) CFR (cost and freight) Asia, down by more than 70 per cent from its peak of $4,000/tonne CFR Asia in the fourth quarter last year,” the website reported.

“By April, there will be a clearer price direction but certainly in the first quarter of this year, prices are expected to fall further to around or below $1,000/tonne CFR Asia,” the website quoted one Indian tyre manufacturer as saying.

Prices are expected to fall further still as scores of tyre makers in China are expected to closedown for “extended periods” over the Lunar New Year holidays. This Chinese holiday usually results in week-long plant closures, however this year, as the European manufacturers did over Christmas, the Chinese tyre makers are reportedly using the opportunity as a way of reducing output. As a result some plants are said to be planning shut downs of up to a month.