Bearish Asian SBR Market, Falling Amid Weaker Procurement from Auto Makers

The Asian Styrene Butadiene Rubber (SBR) market, a key source of synthetic rubber for tire production and industrial uses, has faced declining prices recently. Weak demand of SBR from downstream industries and lower feedstock costs have contributed to this trend.

SBR prices in Asia have fallen over the past few weeks, driven by sluggish demand, particularly in the automotive sector. While China’s car sales rose in October 2024, broader economic uncertainties dampened the overall market sentiment. The automotive sector, a major consumer of SBR, faces challenges, especially in Japan, where rubber futures declined following China’s anticipated stimulus package. The 10 trillion-yuan debt plan aimed to support local financing but failed to reassure investors, leading to dips in rubber contracts across Asian exchanges.

Feedstock markets, especially for benzene and styrene, softened due to declining oil prices and weak consumer sentiment. In China, major styrene producers suspended operations on three lines for maintenance, suggesting a potential supply hurdles in future. Despite this, spot demand of SBR remains low in Northeast and Southeast Asia, with many market participants adopting a cautious stance.

Although China’s increase in car sales provided a temporary boost, weak indicators like slow consumer price growth and falling producer prices point of SBR to ongoing market challenges. Low shore-tank inventory levels in China offer some price support, but overall caution persists as stakeholders await clearer economic signals.

In contrast, India’s automotive market showed strong performance in October, fueled by festive season sales. Retail car sales surged year-on-year, driven by robust consumer demand. However, high inventory levels at dealerships may limit future orders for SBR-based products, affecting the market outlook.

Rural India outperformed urban areas in vehicle sales during October 2024, diverging from the usual trend of urban dominance during the festive season. Data from the Federation of Automobile Dealers Associations (FADA) indicated a decline in urban sales, while rural markets saw a significant increase, highlighting a resilient recovery and shifting dynamics in India’s automotive retail landscape.

The outlook for the Asian SBR market remains cautious, shaped by geopolitical factors, fluctuating feedstock prices, and uncertainties in the automotive sector's recovery. Industry participants are expected to closely monitor policy changes and adjust production strategies as needed, while waiting for clearer signals from China’s economic policies. As per the analysis by ChemAnalyst, slight increase in the production costs may drive a trivial increase in SBR prices across Asia as market players navigate the evolving demand landscape.