Tyre Makers in Asia Raise Concerns Over Feedstock BD Surge
SINGAPORE (ICIS news)--Tyre makers in Asia have raised concerns on Tuesday over soaring feedstock butadiene (BD) prices, which may hamper a recovery in demand and impact their fourth-quarter contract negotiations with styrene butadiene rubber (SBR) producers.
BD is the feedstock for SBR, which in turn is used in the manufacture of tyres for the automotive industry.
“The feedstock BD price surge is keenly watched by tyre makers as it may hamper the recovery of the market and any price volatility is not healthy for the industry in the long run,” a major tyre maker said.
BD spot prices have hit $1,000-1,050/tonne (€700-735/tonne) CFR (cost and freight) northeast (NE) Asia, up $200/tonne from a month ago, according to global chemical market intelligence service ICIS pricing.
The hefty BD price increases had wiped out SBR producers' margins, which require a spread of $400-500/tonne between SBR and BD to post any profit.
“We are closely watching the feedstock BD price trend. If it continues to go up unabated, this will definitely push SBR prices higher and impact our [fourth-quarter] contract negotiations with the SBR makers,” a tyre maker said.
Another tyre maker said: “We can’t see BD prices going up further to $1,100/tonne, as no SBR maker will accept BD at this price level, given that the [third-quarter] SBR contracts have been concluded at $1,300-1,400/tonne.”
In light of the feedstock BD price escalation, several SBR producers in Asia have raised SBR prices. Some have cut operating rates and may consider extending their SBR plant shutdowns.
However, the SBR price hikes had met with strong resistance from tyre makers, who have been hard hit by the global recession.
Although tyre makers in Asia are in a relatively better position than their counterparts in Europe and the US, given the double-digit growth in emerging markets such as China and India, they have not been completely insulated from the global recession, which has seen global auto makers such as Toyota Motor post massive losses and General Motors and Chrysler go bankrupt.
Major tyre producer Goodyear announced this week that it will shut down its tyre plant in the Philippines, which will see 500 jobs go.
“The Philippine plant is not competitive and Goodyear chose to shut it down as a long-term strategic decision. It also reflects the current weak global market conditions, as we do not expect the US auto market to recover until the second half of next year, at the earliest,” an industry source said.
In Europe and the US, several major tyre producers such as Continental and Michelin have shut down production lines and laid off workers.
BD is the feedstock for SBR, which in turn is used in the manufacture of tyres for the automotive industry.
“The feedstock BD price surge is keenly watched by tyre makers as it may hamper the recovery of the market and any price volatility is not healthy for the industry in the long run,” a major tyre maker said.
BD spot prices have hit $1,000-1,050/tonne (€700-735/tonne) CFR (cost and freight) northeast (NE) Asia, up $200/tonne from a month ago, according to global chemical market intelligence service ICIS pricing.
The hefty BD price increases had wiped out SBR producers' margins, which require a spread of $400-500/tonne between SBR and BD to post any profit.
“We are closely watching the feedstock BD price trend. If it continues to go up unabated, this will definitely push SBR prices higher and impact our [fourth-quarter] contract negotiations with the SBR makers,” a tyre maker said.
Another tyre maker said: “We can’t see BD prices going up further to $1,100/tonne, as no SBR maker will accept BD at this price level, given that the [third-quarter] SBR contracts have been concluded at $1,300-1,400/tonne.”
In light of the feedstock BD price escalation, several SBR producers in Asia have raised SBR prices. Some have cut operating rates and may consider extending their SBR plant shutdowns.
However, the SBR price hikes had met with strong resistance from tyre makers, who have been hard hit by the global recession.
Although tyre makers in Asia are in a relatively better position than their counterparts in Europe and the US, given the double-digit growth in emerging markets such as China and India, they have not been completely insulated from the global recession, which has seen global auto makers such as Toyota Motor post massive losses and General Motors and Chrysler go bankrupt.
Major tyre producer Goodyear announced this week that it will shut down its tyre plant in the Philippines, which will see 500 jobs go.
“The Philippine plant is not competitive and Goodyear chose to shut it down as a long-term strategic decision. It also reflects the current weak global market conditions, as we do not expect the US auto market to recover until the second half of next year, at the earliest,” an industry source said.
In Europe and the US, several major tyre producers such as Continental and Michelin have shut down production lines and laid off workers.
quoted from: ICIS.com
