Market and product

Spot polybutadiene (PBR) prices in Asia are likely to fall in the near term, tracking losses in the feedstock butadiene (BD) market, as demand typically weakens toward year end, industry sources said on Thursday.

Offers for high-cis grade PBR are currently at $1,950-2,050/tonne CFR (cost and freight) NE (northeast) Asia, but are likely to be revised lower in the coming weeks amid expectations of further declines in BD prices, they said.

Prices of feedstock BD have declined by 8% since mid-October to around $1,500/tonne CFR NE Asia on 28 October, according to ICIS data.

“Tyre production usually slows in November and December. Demand for PBR will slow down, so we expect the PBR price to fall during this period,” a downstream tyre maker said.

PBR is a raw material for the production of tyres for the automotive sector.

Meanwhile, rival product natural rubber is currently priced lower than PBR by about $500/tonnne, making it a more attractive substitute raw material for tyre makers, market sources said.

Tyre makers in emerging economies in Asia have more flexibility in raw material substitution in their production, market sources said.

“The NR price is likely to remain between $1,400-1,500/tonne range for November and December as supply is ample, so tyre makers will consider using more NR rather than PBR,” a trader said.

Expectations that PBR prices will fall further, meanwhile, were keeping some buyers out of the market.

“We will hold back our PBR purchases and wait for prices to fall lower,” a second tyre producer said.

The regional PBR market can also expect downward pressure from competitively priced deep-sea PBR cargoes flowing into Asia, market sources said.

Spot prices of Iranian and Russian material are usually priced lower than Asian material by about $100-200/tonne, they said.

“We are selling good quality Iranian PBR into the Indian market and we see a lot of potential also in other markets in southeast Asia and China,” a trader said.

Tyre makers in India also have the option to procure supplies from Europe, the Middle East and the US, an industry source said. - ICIS