European SBR Industry Struggles Amidst Declining Demand from Tire Industries

Germany- The European market continued to witness a decline in the demand and sales of the replacement of automotive vehicles showcasing its consequent impact on the operational activities of Styrene Butadiene Rubber (SBR) in the regional market. The prediction is that sales volumes in the tire replacement markets could decline by up to 2%, primarily due to Europe and North America experiencing low demand. The market insiders of the tire industries trim the sales percentage for upcoming quarters, and the current market scenario dips the overall market prices of SBR. SBR prices in the third week of August settled at USD 2010 per MT, FD Wuppertal on August 18th.

In general terms, the overall price dynamics of SBR gets governed by the feedstock (styrene and butadiene) prices, and the production cost of SBR depends upon the same. Rising Crude Oil prices are leading to higher production expenses for the feedstock, which in turn should directly influence the market cost of SBR. The movement in price is a result of a combination of factors, including geopolitical conflicts, disruptions in supply chains, and an increasing worldwide Crude Oil demand. On the other hand, the demand for SBR is under pressure, proportionally impacting the overall prices of SBR in the European market.

SBR and tire market players have revised their sales projection downward for the year, citing weakened tire markets in Europe and North America. While the tire manufacturers' sales and margin forecasts for other segments remain unchanged, its automotive division experienced sales growth across its various units towards the end of the second quarter and continues for the mid-Q3. However, inflation, currency effects, and logistics costs affect adjusted earnings before interest and taxes. In response to declining demand and high costs, one of the automotive companies (Continental AG) is shutting down one of its German car part plants. Consequently, the demand for SBR in the European market remained subdued.

The German supplier, known for its tire, automotive component, and industrial material sales, is undergoing adjustments as the automotive industry transitions to electric vehicles. The tire industry's downward revision in its outlook for replacement tires highlights a challenging outlook for the sector in the second half of the year. As the last of the European tire manufacturers to report second-quarter earnings, this adjustment will likely influence market sentiment. As per ChemAnalyst, SBR prices are anticipated to decline in the upcoming months as the market dullness and shrunk demand outlook will uniformly impact the overall prices of SBR in Europe.