Supply of high-cis polybutadiene rubber (PBR) in Southeast Asia may be longer than anticipated this year, as deep-sea suppliers, as well as producers from China and India, shift their surplus stocks to this area in the midst of the downturn in their respective car markets.
Market share rivalry in Southeast Asia is expected to stiffen this year with the Chinese PBR manufacturers, the latest to join the rising supplier tribe from India, Russia, Europe, Iran, and Saudi Arabia–in addition to traditional suppliers from South Korea, Japan, and Taiwan.
"The Chinese PBR makers recently exported about 500-1,000 tons per month to Southeast Asia and this year's volumes of exports are expected to rise further due to the growing demand from the Chinese tyre makers in this area," a Chinese trader said.
Many major Chinese tyre makers have set up or moved their production plants to countries in Southeast Asia, including Vietnam, Thailand, and Indonesia, owing to the increasing tensions in the war between the US and China.
Chinese PBR manufacturers including Sinopec, PetroChina and Transfer have capitalized on this recent development and have diverted their surplus stocks to Southeast Asian Chinese tyre makers.
China is the largest automotive market in the world and a major manufacturer and exporter of tyres. China-made tyres, including the United States, a major export market, are exported worldwide.
"The deep-sea PBR manufacturers regularly export to Southeast Asia and the Indian PBR manufacturer is also taking a more active role in this field," said another trader.
The slump in the Chinese and Indian automotive sectors had weighed on domestic demand, prompting Chinese and Indian PBR manufacturers to look for other export markets.
China's vehicle sales hit 2.46 m units in November, down 3.6% year-on-year, dropping for the 17th consecutive month, while demand fell 3.8% to 2.59 m units, industry data showed.
India's vehicle sales declined by 12.05 per cent annually to 1.79 m units in November, while production fell by 1.41 per cent to 2.34 m units, industry data showed that High-cis PBR is a key feedstock for the automotive industry's tyre production.
ICIS data showed that high-cis PBR spot prices softened to $1,380-1,450/ton CFR (cost and freight) on Southeast Asia (SE) on 2 January, down $10/ton as of 19 December 2019.
