Petrotahlil -China’s styrene butadiene rubber (SBR) imports have slowed ahead of the country’s long holiday in October, while demand for November cargoes may wane amid an unclear outlook.
“The distributors and tyre makers in China have covered their October requirements for SBR and are not in a hurry to lock in November requirements,” a Chinese SBR producer said.
A combination of strong Chinese demand, limited supply and eroded margins has prompted major Asian SBR producers to hike offers for non-oil grade 1502 SBR to $1,350-1,400/tonne CIF (cost, insurance and freight) China.
On 23 September, non-oil grade 1502 SBR prices were up $50/tonne week on week at $1,250/tonne CIF China, ICIS data showed.
“We expect China’s demand for SBR to remain firm in the fourth quarter but there will be surplus feedstock butadiene (BD) supply in November, with new BD supplies coming on stream, so the SBR price may be under pressure,” the SBR producer said.
Amid higher SBR offers, downstream tyre makers in the country are likely to hold back their November purchases as there could be a potential downside to prices from new BD supply, market sources said.
Three crackers started up in China in the third quarter, with a total combined BD capacity of 360,000 tonnes/year.
BD is a raw material for the production of SBR, which goes into tyres for the automotive industry.
China is the world’s largest automotive market and a major consumer of SBR.
Its automotive industry has been posting growths in the past months, with August vehicle sales up 11.6% year on year, rising for the fifth consecutive month.
The Chinese markets will be shut for the Mid-Autumn Festival and National Day holidays on 1- 8 October.
Overall SBR trades in northeast Asia were subdued this week, with key players in South Korea and Taiwan not active in the market ahead of their respective holidays.
South Korea will celebrate Chuseok or Thanksgiving on 1-4 October, while Taiwan will have its Mid-Autumn Festival over the same period.
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Source : ICIS