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| Asia SBR makers seek 17% hike in Q3 contracts on surging BD |
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| News Source：http://www.jinchemical.com/
; SendDate：2011-6-10 17:04:16 |
SINGAPORE-Asian styrene butadiene rubber (SBR) producers are seeking a price hike of about 17% for third-quarter contracts because of tight supply and surging cost of feedstock butadiene (BD), industry sources said on Friday.
Price nominations for the September quarter were at $4,400-4,600/tonne (?,036-3,174/tonne) CFR (cost and freight) Asia for non-oil grade 1502 SBR, against the settled prices at $3,700-4,000/tonne CFR Asia in the second quarter, they said
The contract prices vary, depending on time of settlement, cargo size and terms and conditions.
SBR producers said they have no choice but to raise prices, expecting negotiations to be tough given the magnitude of the increase being sought.
"We have to factor in the big increases in the feedstock BD price, which is still rising, or we will have no margins," a Korean SBR producer said.
A major Korean olefin producer is now offering July BD shipments at above $4,000/tonne CFR NE Asia, market sources said.
BD prices were assessed at $3,650-3,700/tonne CFR northeast (NE) Asia in the week ended 3 June, representing an increase of more than $300/tonne from early May, according to ICIS data.
Meanwhile, downstream tyre producers in China and India have ruled out a massive price increase for third-quarter SBR contracts.
"The automotive industry has not really picked up and we cannot absorb the rising raw material costs and pass them on to the consumers," a China-based tyre producer said.
"We are looking at a rollover for third-quarter contracts," he added.
China's vehicle markets have softened following the government's aggressive credit tightening policy and amid restrictions on car purchases in first-tier cities like Beijing and Shanghai.
May sales fell 3.98% year on year to 1.38m vehicle units, down 10.9% from April, according to the China Association of Automobile Manufacturers (CAAM).
Production last month also fell 4.89% year on year to 1.35m units, 12.1% lower than April's output, the data showed.
Indian tyre producers are also putting up a strong resistance to the huge price hikes.
"It is a cost-push situation and not driven by demand. We are in no hurry to settle and will substitute SBR with natural rubber as we anticipate natural rubber prices will continue to fall," said an Indian tyre producer.
Natural rubber and SBR are substitutes for each other in the production of tyres.
Natural rubber prices have fallen to around $4,650/tonne this week, from above $5,200/tonne in early April.
Meanwhile, tight SBR supply is another factor for seeking much higher prices for the third quarter, according to producers.
"We have limited stocks as we have received many enquiries from tyre producers in the US for cargoes and have increased our sales volumes to the US substantially," a Korean SBR producer said.
Tyre producers in the US have turned to Asia for SBR supply, following a force majeure declaration by major synthetic rubber producer, Goodyear, in the US.
SBR producers in the US have shut down or cut operating rates because of the lack of BD in the US. |
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