Daniela Quintero, commercial intelligence manager at Grupo Dynasol believes that pressures on synthetic rubber (SR) prices should decrease after the second quarter of 2017, because feedstock availability will return to normal level.

Quintero says that SR prices are being driven by developments in butadiene market, where supply has been a critical issue during the recent months. Particularly, this is the case in European and Asian countries because large crackers have been shut down for maintenance.

Reportedly, yet another reason is an unexpected surge in Chinese demand over the last months of 2016 and January 2017.However, Quintero points out that Chinese automotive market’s demand is not going to be as big this year, as it was in 2016; and this is due to the ending of tax break on car purchasing in the country. Also, she says

Also, she says that the last year export demand from Chinese tire makers was very strong, as they bypassed US markets hit by tariffs and forwarded their products to other regions, particularly India.

In order to move to another market, a lot of inventory needs to be built up, according Quintero. She adds that this year it won’t be sustained. Based on GDP forecasts for Asia and a seasonal decrease in business activity in Europe over the summer, demand is going to fall off in the middle of the year. Quintero describes the current situation with SR prices as fairly unique. Even back in 2011-12 there were no similar increases in price. Although, they were driven by downstream demand rather than, as now, feedstock-availability.

Article source: European Rubber Journal