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Asia SBR downtrend may continue on BD, NR slump, weak demand

Spot styrene butadiene rubber (SBR) values in Asia may remain on a downtrend, tracking price declines in feedstock butadiene (BD) and rival product natural rubber, market sources said on Wednesday.

Spot offers for fresh June shipments of non-oil grade 1502 SBR have fallen to $1,350-1,400/tonne CFR (cost and freight) southeast (SE) Asia, down by about $100/tonne from the previous month.

Over roughly the same period, SMR 20 tyre grade NR traded on the Malaysian Rubber Exchange shed about $250/tonne to around $1,230/tonne on 14 June.

NR and SBR are substitute raw materials in the production of tyres for the automotive industry and their prices tend to move in tandem with each other.

Feedstock BD prices, meanwhile, have slumped 17% since early May to an average of $885/tonne CFR SE Asia on 10 June, ICIS data showed.

“Demand [for SBR] in southeast Asia has slowed as the downstream tyre makers are largely covered for June and there is also abundant supply,” a trader said.

Most downstream tyre makers in the whole of Asia are maintaining lean inventories given ample regional supply, market sources said.

In the key China market, demand has remained soft with downstream tyre factories operating at reduced capacity amid a slowdown in the domestic economy, as well as sluggish global growth.

“The Chinese domestic SBR prices have been falling due to ample supply and weak domestic demand and this will put pressure on the SBR import prices as well,” a trader said.

In India, demand is also expected to remain lacklustre from June to September with the onset of the monsoon season. Trading and manufacturing activities in the country tend to slow down during this time.

“There is ample supply of NR, and NR price is lower than SBR. We expect the SBR price to drop to $1,300/tonne CFR India for fresh shipments of non-oil grade 1502,” a tyre maker said.

Tyre makers in the emerging economies of Asia have more flexibility in formulations adjustments and raw material substitution, market sources said.