Due to tight supply in the styrene butadiene rubber market and soaring raw material butadiene costs, Asian styrene butadiene rubber (SBR) producers recently raised the price of the non-oil grade 1502 SBR contract in the third quarter to 4400-4600 U.S. dollars per ton (CFR, Asia). The contract price in the second quarter was 3,700 to 4,000 US dollars per ton (CFR, Asia). Manufacturers said they had no choice. However, given the large price increase, it is expected that it will be difficult to negotiate with downstream prices.
An SBR producer in South Korea stated that raw material butadiene prices have risen sharply, and the upward trend has continued. There will be no profits without raising prices. A major olefin producer in South Korea has raised its butadiene quote in July to 4,000 U.S. dollars per ton (CFR, Northeast Asia).
The tight supply of SBR is another factor that causes producers to plan to substantially increase the contract price in the third quarter. The inventory of an SBR producer in South Korea has been very limited, and there have been many downstream inquiries from the United States. As a result, it has increased SBR shipments to the United States and reduced the supply in the Asian market. Due to the lack of butadiene supply, some SBR producers in the United States have already shut down their facilities or cut production. After the US Goodyear Company announced that it was affected by irresistible forces, US tire manufacturers began to shift to Asian markets to obtain SBR supply.
At the same time, downstream tire manufacturers in China and India are actively resisting the sharp increase in SBR's contract price in the third quarter. A tire manufacturer in China said that the auto industry has shown signs of fatigue and it is impossible to digest rising raw material costs or to pass on costs to consumers. The Chinese auto market has been weakened by the government’s tightening credit policy and the policy of restricting automobile purchases in first-tier cities such as Beijing and Shanghai. According to statistics, China's auto sales fell 3.98% year-on-year in May and sales were 1.38 million units, down 10.9% from April. At the same time, auto production in May dropped 4.89% year-on-year to 1.35 million units, down 12.1% from April.
Indian tire manufacturers are also jointly preventing the sharp rise in SBR prices. A tire manufacturer in India stated that it is not in a hurry to negotiate the SBR contract price. The current market is a cost-driven rather than demand-driven. At present, the price of natural rubber has dropped to about 4,650 US dollars / ton, while the price in early April was 5,200 US dollars / ton. As natural rubber prices are expected to continue to fall, tire manufacturers will use natural rubber instead of SBR.
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