Asia PBR downtrend may continue on poor demand, oversupply

Spot polybutadiene (PBR) prices in Asia may remain on a downtrend in the first quarter because of continued weakness in demand, abundant supply and falling costs of feedstock butadiene (BD), market sources said on Wednesday.

Offers for high-cis grade PBR are being quoted at $1,250/tonne CFR (cost and freight) northeast (NE) Asia this week, down by $50-100/tonne from the previous week, they said.

On 15 January, high-cis PBR was assessed at $1,300-1,350/tonne CFR NE Asia, $50/tonne lower week on week, according to ICIS data.

PBR prices have been falling steadily since 14 August 2014, when prices hit $2,100/tonne CFR NE Asia, the data showed.

“There is no buying interest. Buyers [are on a] wait-and-see [mode] because of the uncertain market outlook and falling feedstock BD prices,” a regional PBR producer said.

Downstream tyre producers are limiting their purchases to smaller parcels, market sources said.

“Buyers are … buying smaller parcels more frequently as the market outlook is so uncertain, with crude and feedstock BD prices tumbling in recent weeks,” another PBR producer said.

BD plunged to an average of $675/tonne CFR  northeast (NE) Asia on 16 January, shedding about 30% of its value since 26 December, ICIS data showed.

Crude oil, meanwhile, is trading below $50/bbl –  at about half their levels seen in June last year.

PBR is used in the production of tyres for the automotive industry.

Supply of the elastomer remained abundant in Asia, as European suppliers continue to ship out material to the region at competitive prices to clear their surplus stocks before their current fiscal year ends in March, market sources said.

“There is too much PBR supply in the market … so prices are being pressured to go lower as suppliers compete for business, ” a trader said.

In the key China market, demand for PBR has slowed down significantly amid a slowing Chinese economy, market sources said.

The country’s 2014 GDP growth of 7.4% was the lowest in the 24 years, and was lower from the 7.7% pace of expansion recorded in the previous year.

China is one of the world’s top two economies and its largest automotive market.

Vehicles sales in the country increased 6.9% last year to 23.5m units, data from the China Association of Automobile Manufacturers (CAAM) showed. The growth was less than half the 16% increase recorded in 2013.