Synthetic rubber prices set to fall further

London – Global markets for butadiene rubber (BR) and styrene-butadiene rubber (SBR) are set for further declines in 2015 on the back of "continuing soft demand", leading players in these markets forecast.

“As far as the butadiene rubber market is concerned, the word I would use is ‘desperation’”, Richard Dobson, head of rubber and chemicals distribution company Matarox told ERJ.

“This is especially with regard to the Russian pricing at the moment. The level is unbelievably low, and they seem willing to sell their products at almost any price in some markets,” added Dobson.

Chinese as well as global demand for both SBR and PBR have slowed down, continued Dobson, adding that in the light of a 50-percent drop in crude oil and naphtha prices, the market is expected to continue to experience a downward trend in the short-term.

In addition to the oil impact, the abundance of natural rubber, for which butadiene rubber is a substitute, and its low prices don’t help the market and further weaken it, said the Matarox boss.

Asked how long the lows were expected to continue, Dobson said: “It’s been low for some months and just as we think we’ve reached rock-bottom, there’s a new low.”

“The currency exchange rate and the volatility of the market don’t help either,” he added.

These views are echoed in comments from leading synthetic rubber producers Indian petrochemicals major Reliance Industries Ltd and Zeon Corp. of Japan

In a  results statement for the first three quarters of its 2015 fiscal year – to  31 March – Reliance reported “continued soft demand for synthetic rubber.”

In the last three months of 2014, prices for BR dropped 13 percent on a quarter-on-quarter basis due to weak market conditions. On the plus side, though, it noted that margins had improved as prices  for butadiene monomer fell more sharply.

Undeterred by lower rubber prices, India’s sole major BR producer said it aims to increase its share of the share of its domestic market for the polymer following the start-up of a new capacity at Hazira, India.

Reliance is also ramping up production at its new 150ktpa SBR plant at Hazira –  a plant is designed to produce a full range of dry as well as oil-extended grades of emulsion SBR.

In Japan, meanwhile,  Zeon expects weakness in elastomer materials markets were set to have a negative impact on its earnings for its  2015 fiscal year to 31 March, according to a report on the group by Investment Bridge Co. Ltd.

During the first half of the fiscal year, synthetic rubber sales volumes declined at Zeon, with domestic sales and exports of general-use rubber falling by 2 percent and 8 percent respectively.

Weak sales of tires within Japan, weakness in overseas markets contributed to these declines, said the report, adding that increased sales of low-priced latex products and flat sales volumes had further contributed to the downward sales trend.