butadiene/styrene butadiene rubber (epca 2012 presentation)
DESCRIPTION
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.TRANSCRIPT
EPCA 2012 Industry Session Butadiene / Styrene Butadiene Rubber
David Potter, Editor, C4, butadiene
Miguel Cambeiro, Editor SBR
Agenda
• Emergence of butadiene
• Automotive-led price decline begins
• Market dynamics SBR
• New SBR assessments
The emergence of butadiene
Source: Platts On The Net 2007 - 2012
$ /mt
The pricing boom of 2011
Source: Platts On The Net 2007 - 2012
$ /mt
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
Why is the US short?
EthylenePropylene
ButadieneBenzene
Other
Ethane Cracking Yields:
Ethylene 78%Butadiene 2.5%
Source: Platts
Why is the US short?
Ethylene
Propylene
Butadiene Benzene
Other
Light Naphtha Cracking Yields:
Ethylene: 27.9% Butadiene 4.5%
Source: Platts
Butadiene weighs in on cracker margins…
Source: Platts On The Net 2009 - 2012
…but raffinate-1 struggles
Source: Platts On The Net 2011 - 2012
$/mt
2012: The decline begins
Source: Platts On The Net 2011 - 2012
$/mt
Butadiene, SBR relationship in % terms
30%
18% 21%
31%
Synthetic Rubber - Tires Synthetic Rubber -Non-tires Plastics Other
Source: Platts
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
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
Investment in butadiene
BASF Antwerp 2014
Versalis Dunkirk 2015
MOL Tiszaújváros 2015
LyondellBasell Wesseling 2013
Source: Platts
SSBR production projects to add capacity
Styron - Schkopau 2012. Expands production to 160 kt/yr
Lanxess – Port Jerome to expand rubber capacity to 140 kt/yr by 2015
Synthos – Krakow to build 100 kt/year plant by 2015
Versalis – new 30 kt/yr 25kt line at SSBR Grangemouth by 2014
Versalis – To build new Ravenna 60kt/yr plant by H2 2015 Source: Platts
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
ESBR feedstock contract vs. spot
Source: Platts
1000
1500
2000
2500
3000
3500 70% Butadiene Contract Price + 30% Styrene Contract Price €/mt
70% Butadiene Spot Price + 30% Styrene Spot Price €/mt
Natural Rubber (FOB Sing) €/mt
Natural rubber drives SBR
Asia diverges
$/mt
2012 – January to September
SSBR pricing
• Current SSBR is predominantly traded via term contracts. Low volumes are traded on spot
• It trades as a premium over oil extended ESBR 1723 or 1783 grade
• Premium reflects additional R&D costs and fundamentals
Platts natural rubber assessments
PC0682 Platts Rubber Index Daily/Weekly Averages-05Oct12 Singapore (Platts)--05Oct12/0605 am EDT/ 1005 GMT (US$/kg) FOB Basis On Day Weekly Singapore Change Average TSR 20 Nov 3.06-3.08 +0.00 3.04-3.06 Dec 3.06-3.08 -0.01 3.05-3.07 RSS 3 Nov 3.33-3.35 -0.04 3.34-3.36 Dec 3.34-3.36 -0.04 3.35-3.37 Rubber commentaries can be found on PCA 681, daily prices on PCA 680 and monthly prices on PCA 676.
Platts new SBR assessments
PC0752 Platts NWE SBR Weekly Assessments - 05Oct12 London (Platts)--05Oct12/1204 pm EDT/ 1604 GMT mid change $/FOB Rdam 1500 2400-2410 2405.00 -40.00 1502 2450-2460 2455.00 -40.00 1723 2320-2330 2325.00 -40.00 1783 2255-2265 2260.00 -40.00 5025 3150-3160 3155.00 -40.00 FD NWE Euro/mt 1500 1895-1905 1900.00 -50.00 1502 1935-1945 1940.00 -50.00 1723 1835-1845 1840.00 -50.00 1783 1785-1795 1790.00 -50.00 5025 2535-2545 2540.00 -50.00 (Weekly commentary can be found on PCA753.)