Demand for styrene butadiene rubber (SBR) in southeast Asia is expected to remain stable from downstream footwear sector, while likely to stay weak in the automotive sector.

The shoe industry has helped bolster demand for SBR, with trades to Vietnam - a major footwear production centre - relatively brisk.

On 23 October, non-oil grade 1502 prices were at $1,350-1,420/tonne CFR (cost and freight) southeast (SE) Asia, up by $10/tonne from the previous week, ICIS data showed.

“The footwear makers in Vietnam can support non-oil grade 1502 SBR at $1,420/tonne as business is still good for the footwear makers compared with the tyre makers,” a trader said.

Non-oil grade 1502 SBR is mainly used as a feedstock for the production of tyres, which go into the automotive industry.

Footwear accounts for a much smaller share of the overall consumption of the synthetic rubber.

“The footwear makers can pay a higher price as they consume less SBR compared with the tyre makers,” a regional SBR maker said.

Demand for SBR from downstream tyre makers has waned due to the weak automotive sector and slowing economies in Asia.

“The downstream tyre makers in Asia are mostly running at lower rates because of the slump in the automotive sector and are only purchasing SBR on a hand-to-mouth basis,” another trader said.

In view of waning demand, SBR producers in Asia are mostly running at reduced rates.

“Margins have been eroded and this is the first time in many years that we are running at reduced rates,” another regional SBR maker said.

Source: ICIS

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