Faltering Chinese Demand Caps Asia SBR Price Rebound
SINGAPORE (ICIS news)--Growing concerns over the worsening global automobile market and faltering Chinese demand may cap the price rebound of Asian styrene butadiene rubber (SBR), buyers said on Wednesday.
“Consumers are cutting down on spending and holding back purchases of automobiles on worries over job security in a deepening global recession,” a major downstream tyre producer said.
Asia SBR producers have hiked offers for non-oil grade 1502 by about $200/tonne (€156/tonne) to $1,400/tone CIF (cost, insurance, freight) China for March, but the price falls in the domestic Chinese market this week have dampened sentiment and put a lid on the proposed price hikes.
The buy-sell price gap has widened, with Chinese traders seeking to purchase import cargoes below $1,200/tonne CIF China for March delivery.
Domestic non-oil grade 1502 prices fell to yuan (CNY)10,800-11,500/tonne ex-warehouse this week, down about CNY4,000/tonne since mid-December, as traders off-loaded import cargoes below CNY11,000/tonne.
“The price surge in the Chinese domestic market was driven largely by speculative trades as end-user demand is still weak because of the slump in the global automobile market,” a downstream tyre producer said.
Apart from faltering Chinese demand, the drop in the natural rubber prices and weakened market sentiment amid concerns over the global recession and the potential bankruptcies of major US auto-makers - GM and Chrysler - are adding to the woes of the SBR producers.
The price of natural rubber, a substitute for SBR, has dropped to $1.25/kg, down from $1.45/kg in early January.
“The global economy is very fragile and we are closely watching the situation of GM and Chrysler, and its impact on the market if they were to go bankrupt,” a Chinese SBR producer said.
GM and Chrysler are seeking additional funding from Washington to stave off bankruptcy proceedings amid the sharp drop in car demand, raising the bailout package for the US automotive industry to $40 bn.
The slump in the global automotive market has hurt the tyre producers, with most reeling from sharp falls in sales.
Major US tyre maker, Goodyear Tyre and Rubber Co, has announced that it will cut 5,000 jobs to save costs, while other major tyre producers including Michelin, Bridgestone, Kumho Tires and Cooper Tires, have slashed operating rates and closed down production lines.
“We are keeping low inventories and expect the second quarter to worsen as we expect orders to slow down significantly,” a tyre maker in Malaysia said.
“Consumers are cutting down on spending and holding back purchases of automobiles on worries over job security in a deepening global recession,” a major downstream tyre producer said.
Asia SBR producers have hiked offers for non-oil grade 1502 by about $200/tonne (€156/tonne) to $1,400/tone CIF (cost, insurance, freight) China for March, but the price falls in the domestic Chinese market this week have dampened sentiment and put a lid on the proposed price hikes.
The buy-sell price gap has widened, with Chinese traders seeking to purchase import cargoes below $1,200/tonne CIF China for March delivery.
Domestic non-oil grade 1502 prices fell to yuan (CNY)10,800-11,500/tonne ex-warehouse this week, down about CNY4,000/tonne since mid-December, as traders off-loaded import cargoes below CNY11,000/tonne.
“The price surge in the Chinese domestic market was driven largely by speculative trades as end-user demand is still weak because of the slump in the global automobile market,” a downstream tyre producer said.
Apart from faltering Chinese demand, the drop in the natural rubber prices and weakened market sentiment amid concerns over the global recession and the potential bankruptcies of major US auto-makers - GM and Chrysler - are adding to the woes of the SBR producers.
The price of natural rubber, a substitute for SBR, has dropped to $1.25/kg, down from $1.45/kg in early January.
“The global economy is very fragile and we are closely watching the situation of GM and Chrysler, and its impact on the market if they were to go bankrupt,” a Chinese SBR producer said.
GM and Chrysler are seeking additional funding from Washington to stave off bankruptcy proceedings amid the sharp drop in car demand, raising the bailout package for the US automotive industry to $40 bn.
The slump in the global automotive market has hurt the tyre producers, with most reeling from sharp falls in sales.
Major US tyre maker, Goodyear Tyre and Rubber Co, has announced that it will cut 5,000 jobs to save costs, while other major tyre producers including Michelin, Bridgestone, Kumho Tires and Cooper Tires, have slashed operating rates and closed down production lines.
“We are keeping low inventories and expect the second quarter to worsen as we expect orders to slow down significantly,” a tyre maker in Malaysia said.
source: www.ICIS.com
