Regional producers have raised the contract offers for non-oil grade 1502 SBR by $100/tonne (€77m/tonne) to $1,200/tonne CFR (cost and freight) Asia from the first quarter, but downstream tyre makers insist on a price roll-over.
“We believe a roll-over of $1,100/tonne CFR Asia is a realistic and reasonable target given that the second quarter is expected to remain weak,” a tyre producer said.
The sharp decline in automotive sales across the world has sent tyre makers reeling, significantly denting the demand for SBR, a raw material used in the production of tyres for the automotive industry.
Tyre producers such as Kumho, Michelin, Bridgestone and Yokohama have slashed operating rates and shut down production lines as sales plunged amid the deepening global recession.
The latest to join the growing list of companies cutting production is Continental AG. The company plans to close its tyre plants in Germany and France and reduce output in Slovakia as tyre markets are not expected to recover in the short- to medium-term.
“There is ample supply coming from Europe and elsewhere into Asia and we can easily secure lower-priced material from these regions,” said a tyre producer.
Asia has seen an influx of deep-sea imports from Europe, Iran and Russia, which has thwarted Asian producers’ plans to raise prices in the second quarter despite the pick-up in demand after the lunar new year holidays in February.
Falling prices in China also added to the downward price pressure as most SBR producers looking to the country to help lift up sentiment and increase prices.
Domestic non-oil grade 1502 domestic prices in China have fallen by more than yuan (CNY)1,000/tonne ($146/tonne) in the past month to CNY10,300-11,000/tonne ex-warehouse as the market was flooded with cargoes from Europe and Southeast Asia on top of the traditional sources of supply from Korea, Taiwan and Japan.
Even the prices of premium Japanese product have been marked down as producers moved to offload surplus stocks amid the slump in the Japanese domestic market.
The second quarter is expected to remain lacklustre although some industry players have expressed cautious optimism that the market may start to recover in May after the Labour Day holidays in China. (Tire Review/Akron)
