Market and product

US styrene butadiene rubber (SBR) markets will gradually recover from the demand destruction of Q2's widespread coronavirus closures well into 2021.

DEMAND RECOVERY GRADUAL
Downstream sectors will likely take several months to recover to precoronavirus levels of business in North America, which has been the hardest hit region in terms of virus spread and continues to face restrictions.

Obstacles include plant logistics and safety measures, which may limit finished goods output, especially if there is a second shutdown.

As of mid-July, most manufacturers had ramped up from their two-month shutdowns.

About 80% of SBR goes into the manufacture of synthetic rubber, largely for tyres.

Replacement tyre producers, which is about 80% of the tyre market, are said to be running at stronger-than expected rates in many cases, generally around 70-80% of their precoronavirus levels.

Producers that supply to automakers are also rebuilding inventories--some at very strong rates--although with original equipment manufacturers the pace is likely to slow as some projections do not anticipate light-vehicle sales to return to precoronavirus levels until 2023.

Market players are eyeing whether the June and July pickup in raw material demand is a function of restocking or if it is sustainable.

The balance of 2020 will be sharply off 2019 volumes as a result of Q2 tyre plant closures.

The US Tire Manufacturers Association (USTMA) projects an overall 17.8% reduction in tyre shipments from 2019.

Non-tyre end uses for SBR are recovering more slowly.

US SBR consumption in 2020 is expected to decrease by 15% because of coronavirus, while global consumption is expected to decrease by 6%, according to the ICIS Supply and Demand Database.

“Although tyre and automakers in the US are coming back, the protection measures and weak demand are expected to cap the operating rate,” said Ann Sun, senior analyst with ICIS.

“Demand should be hampered by the concerns over second wave of coronavirus infections. Even in China, the country with the time lead in the pandemic, the tyre operating rate has not been back to normal levels.”

ANTIDUMPING CASE COULD BE BOON FOR US MARKET
A US antidumping (AD) and countervailing duty (CVD) investigation regarding imports of passenger vehicle and light truck tyres from Korea, Taiwan, Thailand and Vietnam is under way.

The US International Trade Commission (ITC) determined there is reasonable indication that the domestic tyre industry is materially injured by the imports, which are allegedly sold in the US at less than fair value and subsidised by the government of Vietnam, the ITC said in a release.

As a result of the vote, the US Department of Commerce will continue its CVD and AD investigations and issue its preliminary findings in August and November, respectively. - ICIS-