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Butadiene/styrene butadiene rubber (EPCA 2012 presentation)

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Read the Butadiene/Styrene Butadiene Rubber presentation given at EPCA 2012 by Platts editors David Potter and Miguel Cambeiro. This presentation talks about the emergence of butadiene; automotive-led price decline; market dynamics SBR and new SBR assessments.

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Butadiene/styrene butadiene rubber (EPCA 2012 presentation)

  1. 1. EPCA 2012 Industry SessionButadiene / Styrene Butadiene RubberDavid Potter, Editor, C4, butadieneMiguel Cambeiro, Editor SBR
  2. 2. Agenda • Emergence of butadiene • Automotive-led price decline begins • Market dynamics SBR • New SBR assessments
  3. 3. The emergence of butadiene$ /mt Source: Platts On The Net 2007 - 2012
  4. 4. The pricing boom of 2011 $ /mt Source: Platts On The Net 2007 - 2012
  5. 5. Why did it rise? • Strong demand from the US, where gas cracking leaves market net short for Crude C4 • Good domestic demand – especially from the tire sector. (Michelin records 2nd highest earnings ever. Eur1.29 billion for 2011) • High natural rubber pricing
  6. 6. Why is the US short? Ethane Cracking Yields: Ethylene 78% Butadiene 2.5% Benzene Butadiene Other Propylene Ethylene Source: Platts
  7. 7. Why is the US short? Light Naphtha Cracking Yields: Ethylene: 27.9% Butadiene 4.5% Ethylene Other Propylene Benzene Butadiene Source: Platts
  8. 8. Butadiene weighs in on cracker margins… Source: Platts On The Net 2009 - 2012
  9. 9. …but raffinate-1 struggles$/mt Source: Platts On The Net 2011 - 2012
  10. 10. 2012: The decline begins $/mt Source: Platts On The Net 2011 - 2012
  11. 11. Butadiene, SBR relationship in % terms 31% 30% 21% 18% Synthetic Rubber - Tires Synthetic Rubber -Non-tires Plastics Other Source: Platts
  12. 12. Automotive getting tired in Europe? • Bloated volume auto-makers reduce capacity as recession worsens, demand slumps • Tire-makers follow suit • However more export-reliant premium producers such as Land Rover-Jaguar see strong demand
  13. 13. Sea change in SBR production• New technology produced by Japanese and European producers, predominantly under patent• SSBR set to grow if environmental labelling expands• Chinese producers currently do not have the technology to produce SSBR, but expected to acquire it by 2014-2015
  14. 14. Investment in butadiene LyondellBasell Wesseling 2013 MOL Tiszaújváros Versalis Dunkirk 2015 2015 BASF Antwerp 2014 Source: Platts
  15. 15. SSBR production projects to add capacityLanxess – Port Jerome to Versalis – new 30 kt/yrexpand rubber capacity to 140 25kt line at SSBRkt/yr by 2015 Grangemouth by 2014 Styron - Schkopau 2012. Expands production to 160 kt/yrVersalis – To build new Synthos – Krakow toRavenna 60kt/yr plant build 100 kt/year plantby H2 2015 by 2015 Source: Platts
  16. 16. NWE SBR recovery in 2013?• Europe disconnected with Asia, US markets• Asian BD/SBR, demand and prices rise in September, Europe weak• Asian SBR showing around 2% growth but Europe estimated negative 5-6% compared to 2011• Asian strength expected to continue in 2013• Europe expected to recover later
  17. 17. ESBR feedstock contract vs. spot 3500 70% Butadiene Contract Price + 30% Styrene Contract Price €/mt$/mt 70% Butadiene Spot Price + 30% Styrene Spot Price €/mt 3000 Natural Rubber (FOB Sing) €/mt Asia diverges 2500 Natural rubber drives SBR 2000 1500 1000 2012 – January to September Source: Platts
  18. 18. SSBR pricing • Current SSBR is predominantly traded via term contracts. Low volumes are traded on spot • It trades as a premium over oil extended ESBR 1723 or 1783 grade • Premium reflects additional R&D costs and fundamentals
  19. 19. Platts natural rubber assessmentsPC0682Platts Rubber Index Daily/Weekly Averages-05Oct12Singapore (Platts)--05Oct12/0605 am EDT/ 1005 GMT(US$/kg) FOB Basis On Day Weekly Singapore Change AverageTSR 20 Nov 3.06-3.08 +0.00 3.04-3.06 Dec 3.06-3.08 -0.01 3.05-3.07RSS 3 Nov 3.33-3.35 -0.04 3.34-3.36 Dec 3.34-3.36 -0.04 3.35-3.37Rubber commentaries can be found on PCA 681, daily prices on PCA680 and monthly prices on PCA 676.
  20. 20. Platts new SBR assessmentsPC0752Platts NWE SBR Weekly Assessments - 05Oct12London (Platts)--05Oct12/1204 pm EDT/ 1604 GMT mid change $/FOB Rdam1500 2400-2410 2405.00 -40.001502 2450-2460 2455.00 -40.001723 2320-2330 2325.00 -40.001783 2255-2265 2260.00 -40.005025 3150-3160 3155.00 -40.00 FD NWE Euro/mt1500 1895-1905 1900.00 -50.001502 1935-1945 1940.00 -50.001723 1835-1845 1840.00 -50.001783 1785-1795 1790.00 -50.005025 2535-2545 2540.00 -50.00(Weekly commentary can be found on PCA753.)

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