USES

Styrene butadiene rubber (SBR), the largest volume synthetic rubber, is predominantly consumed in the manufacture of tyres and tyre products. Other non-tyre uses including applications in conveyor belts, gaskets, hoses, floor tiles, footwear and adhesives.

SUPPLY/DEMAND

US supply has been balanced to long, even with the shutdown of East West Copolymer’s Baton Rouge plant in Louisiana in March 2017. Supply of imported material from Asia has covered the gap, especially as a large crop of competing natural rubber (NR) in Asia has pushed SBR producers to increase overseas sales volumes. SBR demand remains steady to slightly higher, driven by the US tyre and automotive sector. While automotive driving activity has increased on lower gasoline prices, tyre sales have been down slightly. Non-automotive uses for SBR have experienced strong demand, owing to a healthy US construction sector.

PRICES

US January contract prices for 1502 non-oil grade SBR were in the high-60s cents/lb to high-70s cents/lb, while 1712 oil-extended contract prices were in the low-70s cents/lb to high-70s cents/lb.

February contracts are expected to increase 3.25-3.50 cents/lb ($72-77/tonne), tracking upstream butadiene (BD) levels. SBR contract prices are formula-based and tied to samemonth BD movements, with some allowance for styrene movements as necessary.

Prices rebounded to start 2018 on upstream tightness and rebounding demand, but could reverse course because of ample NR supply in Asia. Long supply in the region in the fourth quarter of 2017 pushed SBR contract prices down 9 cents/lb in November and December.

Spot SBR prices have moved to a slight premium to contract volumes because of the rising Asian market, but long supply could also reverse that situation.

SBR prices in China may face downward pressure after the Lunar New Year holiday if the NR price remains weak. Spot prices of nonoil grade 1502 SBR were assessed stable at $1,650-1,700/tonne CIF (cost, freight and insurance) China on 14 February, ICIS data showed. NR inventories remain abundant in warehouses in Qingdao, China, traders said. Tyre makers in Asia have more flexibility in feedstock substitution in their product formulations.

In Europe, SBR contracts for February were agreed at varying double-digit increases, due to the rise in feedstock prices. February contracts for dry (1500) grade material increased by €50/ tonne at the low end of the range and rose by €65/tonne at the high end, bringing prices to €1,460-1,555/tonne FD (free delivered) NWE (northwest Europe). Oil extended 1723 and 1783 grade contract prices for February increased by €40/ tonne at the low end and by €55/tonne at the high end, bringing prices to €1,300-1,485/ tonne FD NWE.

TECHNOLOGY

SBR is produced by the copolymerisation of BD with styrene in the approximate proportion of 3:1 by weight. The emulsion process, which produces general-purpose grades, uses feedstocks suspended in a large proportion of water in the presence of an initiator, or a catalyst, and a stabiliser. This employs continuous process production. In the solution process, the copolymerisation proceeds in a hydrocarbon solution in the presence of an organometallic complex. This can be either a continuous or batch process. Some manufacturing facilities have swing capacity with polybutadiene rubber (PBR). Process modifications can produce higher performance polymers. Companies like Asahi Chemical of Japan are pursuing the development of premium products by such means.

OUTLOOK

Global and US SBR supply is expected to trend toward a long position, given ample capacity in Asia and the potential for long supply of competing NR.

Demand growth remains somewhat limited by the automotive industry, which has experienced stagnant growth levels for the past several years. While new auto sales have experienced growth, the replacement tyre market continues to lag behind.

However, tyre production in the US is growing, which could boost the need for domestic production or, more likely, imported rubber. Trade actions to add tariffs and duties to imported SBR have been discussed and could lead to increased imports from non-affected countries, especially Canada. Non-automotive uses for SBR will likely remain a small portion of overall sales, although growth levels in these sectors is likely to be higher than that of tyre production.

additional information from Helen yan and Melissa Hurley