The Asian market for Synthetic Butadiene Rubber (SBR) has continued its upward price trajectory following the conclusion of China’s Spring Festival.

Key takeaways:

• SBR prices are rising driven primarily by increasing costs of raw materials like butadiene.
• The automotive sector is further expected to increase demand for SBR.
• SBR production levels in key South Korean market are holding steady.
• Projections of a global natural rubber shortage are expected to keep demand for synthetic rubber up.

Despite various influencing factors, SBR prices remain resilient, largely driven by persistent cost pressures from raw materials, particularly butadiene, which has seen a steady increase. While styrene prices have stabilized, they continue to support the overall cost structure of SBR, preventing any significant drop in prices despite the stagnation in styrene.

Recently, South Korea's car export unit price dropped for the first time in eight years in 2024, mainly due to slowing EV sales and production disruptions from November's heavy snowfall. This caused the production cost to rise. Additionally, increasing butadiene prices have also significantly contributed to the upward pressure on SBR in South Korea and other Asian markets.

While the SBR market continues to face rising prices, the broader shipping industry is struggling with significant disruptions. Freight carriers globally have warned that they may resort to "cut and run" tactics at transshipment ports due to mounting congestion in East Asia and Africa. Higher than expected yard density and required and modern equipment challenges have come out to be one of the ruling causes of the delay.

The shipping company has indicated that some vessels may skip port calls to maintain schedules as delays continue to impact regional trade. These disruptions are compounded by volatility in intra-Asia shipping, which handles the most container shipments globally. The increasing complexity of shipping lanes and port pairings, along with fluctuations in freight rates, has left shippers struggling to adapt to shifting trade patterns. As a major exporter of SBR, Asia may experience additional trade disruptions, causing delays in both regional and international markets.

In this volatile environment, shippers must stay flexible, informed, and ready to adjust their strategies to the rapidly changing dynamics of the intra-Asia market. The combination of rising production costs in the SBR sector and ongoing shipping disruptions creates a challenging landscape for businesses in the coming months.

The automotive sector is expected to further support demand, especially with the growing adoption of advanced driver-assist systems and full self-driving technology, both of which will drive up rubber consumption in the coming months. While downstream stocking activities are near completion, domestic demand for SBR is stabilizing, with production levels holding steady.

According to our analysts, significant price decreases of SBR are unlikely in the near term. The Association of Natural Rubber Producing Countries (ANRPC) revised projections highlight a global natural rubber shortage, supporting strong demand for synthetic rubber, including SBR. ChemAnalyst notes that while production costs may rise slightly, the impact on SBR prices in Asia will likely be minimal.