Europe Observes SBR Price Rollover in Early August, Bullish Outlooks Anticipated

The Styrene Butadiene Rubber (SBR) pricing dynamics in the European market continued to move steadily as the SBR manufacturers and retailers succeeded in balancing the gap between the demand-supply in the domestic and international markets.

SBR prices in the German market remained stable from the previous week, largely due to stable raw material prices like butadiene, a key raw material influencing SBR production costs. However, the German automotive sector faced a challenging July, with Tesla's new registrations plummeting by 36.7% compared to the same month in 2023, making it one of the worst-performing foreign brands. Renault, Hyundai, and Fiat also saw declines in their sales. This trend reflects a broader weakening in EV demand over the past year, leading to an overcapacity of EV models for traditional automakers in the U.S., Germany, and France. The slower-than-expected transition to fully electrified transportation is becoming evident. According to the European Automobile Manufacturers Association (ACEA), battery electric vehicle (BEV) registrations experienced a slight decline despite an overall increase in car sales.

According to the European Automobile Manufacturers' Association (ACEA), Ford's sales in the European Union, European Free Trade Association, and the UK have dropped significantly, with a 16.9% decline. As the EU, European Free Trade Association, and UK markets face this downturn, the European electric vehicle (EV) sector is under threat from rising lease prices and falling trade-in values. Analysis shows that European leasing firms have nearly doubled EV rental costs in the past three years due to declining resale values and have certainly impacted the demand outlook of EVs and eventually SBR from this segment. Industry experts warn that if financiers are pushed too quickly toward clean mobility, many leasing companies may be forced to exit the market, jeopardizing the EV transition.

Above all, a major impact on the SBR prices occurs due to the feedstock (styrene and butadiene) price fluctuation. SBR composition includes majorly of butadiene (around 75%). Butadiene production unit of Shell Chemicals in Netherlands is under maintencne shutdown and this closure comes at a time when petrochemical producers in Europe and Asia are struggling to survive amidst years of capacity expansion in China and soaring energy costs in Europe. These factors have severely depressed SBR margins in past three years, pushing many firms into consolidation as they grapple with sustained financial pressure.

As per ChemAnalyst, the SBR prices are anticipated to seek price hikes as styrene and butadiene market dynamics are anticipated to witness an incline amidst the expected rise in crude oil value.