Synthetic Rubber (SR) Product line (Polymers)
(An Analysis by Venere Vitiello) 2011 was a tough year on the SR supply side due to a tight supply situation for all of the SR product lines with major price increases, resulting from the feedstock price increases. We saw economic growth activities worldwide through Q3, including growth of motor vehicle production. North America’s Scotlandbank Group forecasted that global automotive sales would be more than 60 million units, thus marking a 5% increase compared to 2010 activities.
Globalization landscape: the US, China, and Japan dominate global rubber consumption, and will continue to do so. China has become the leading consumer of rubber world¬wide, following more than a decade of strong growth in motor vehicle produc-tion and industrial goods manufacturing. The country overtook Japan as the second largest rubber market in the late 1990s and by 2001 had essentially caught up to the US as the world’s leading consumer. While China will continue to extend that lead, the US and Japan will remain leading markets worldwide, because of their extensive motor vehicle and tire industries. (Freedonia Report - the World Tire and Rubber Market).
The International Rubber Study Group expects total worldwide rubber consumption to reach 25.8 million metric tons for 2011 and 27.5 mmt in 2012. Global SR demand is forecast to grow by 4.4 percent to 14.7 mmt in 2011 and by another 7.9 percent to 15.8 mmt in 2012.
The automotive market accounts for nearly 75 percent of the rubber industry, both natural and synthetic. According to the IRSG, tires utilize the largest share of rubber, nearly 60 percent of the rubber industry, with other automotive parts accounting for the remaining 10 to 15 percent. The Rubber Manufacturers Association reported that 41 percent of a tire's composition is rubber, and natural rubber accounts for 40 percent of that share. The Asia/Pacific region will remain the largest and fastest-growing market. Non-tire rubber demand will outpace tire rubber. Tire rubber will continue to benefit from strong growth in Asia, despite a decline in rubber usage per tire (according to Freedonia Group).
Q4 2011 going into January 2012, uncertainties flared in the marketplace. We saw an economic slowdown triggered by the Eurozone crisis which has a potential to drag the US into another recession reflecting slow growth and dormant job market. We have seen pricing dropping on all of the SR product lines and especially on the SBR, TPR, and PBD because of feedstock butadiene (BD) going down. Example, BD monomer pricing in Europe was: Euro/mt FD NEW: Oct = 2,100; Nov = 1,850; and Dec 1,650 from an all time high at 2,525 Euro/mt in August.
EPDM pricing also went down between Nov-Dec by USD .20-.25/lb while the NBR by USD .30-.45/lb. Due to pricing falling, demand was low and everyone was trying to sell and get rid of inventory especially at the end of the year where nobody wants to keep inventory especially high cost inventory plus the holiday season. TPR pricing also a drop of about USD .40/lb on the average.
January activities continue to show uncertainties in the marketplace whereby some say that the SBR prices will be going down further due the BD feedstock pricing and some others forecast an increase in February, after the Chinese New Year. Regardless, pricing will be going up in the next couple of months due to the already tight supply of BD in the marketplace compounded by 7-9 crackers will begin scheduled maintenance turnarounds that are expected to take place between January and the end of June.
EPR and NBR remain unchanged for this month of January; however, likely to increase between February and March. EP(D)M supply side continues to be short until 2013 when new capacities are estimated to come on board . NBR pricing is correlated to BD, thus, pricing will increase.
See you February.
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