Synthetic rubber producers in Europe, who struggled to break even over the summer amid seasonally thin demand, have seen their margins rise recently as falls in feedstock prices have outpaced a decline in the styrene-butadiene rubber market, sources said.
Talk that styrene and butadiene prices may fall further in the fourth quarter could provide a further boost for margins, they said.
“We are able to break even now even [after] we recently slashed our SBR offers by Eur35-50/mt ($40-57/mt),” a producer said.
“That is because both the feedstocks butadiene and styrene have been declining steeply,” she said. “A few months earlier, SBR prices were rising but our margins remained negative”
Her company has now cut its offers for various grades of SBR by Eur200/mt over the past two months.
MARGINS
Butadiene and styrene constitute 75% and 25% of SBR, respectively.
While emulsion styrene butadiene rubber 1500 grade prices have slid $193/mt over the past two months, butadiene prices have dropped $207/mt, with styrene down $437/mt.
“It is the steep drop in styrene that is giving SBR producers a higher margin,” an SBR trader said.
Styrene prices in Europe were last assessed at $850/mt FOB ARA and butadiene at $693/mt FOB Rotterdam, according to Platts data. SBR 1502, the most traded grade of SBR, was last assessed at $1,256/mt FOB NWE.
That gave SBR producers a margin of $517.50/mt over feedstock costs, according to Platts calculations. European SBR producers are known to require a minimum margin of $500 over feedstock costs.
“There are anticipations that styrene and butadiene prices may fall lower in the period October to December. SBR prices may not follow such drops in prices and, therefore, the margins of producers may rise,” one of the largest traders of SBR in Europe said.
SBR-1502 offers in Europe were heard this week in a range of Eur1,100-1,200/mt FD NWE. Offers from Europe usually carry a Eur50-100 premium over offers from Russia.
