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Synthetic rubber prices have kept falling in July due to summer holiday season just as European market players expected. A surplus of SR has been persisting for a good few months because tyre producers are showing weak demand amid the global car market downtrend. The arbitrage window to Asia has remained closed as the Chinese market situation has not improved since last month. Therefore, rubber has followed feedstock depreciation. Reminder: quotations for butadiene, styrene and acrylonitrile have dropped simultaneously this month. Thus, those for SBR grades have decreased by around €60—70/t, with dry E-SBR being on offer at an average of €1,140—1,200/t FCA Eastern Europe in mid-July. NBR prices have lost €50/t compared to the June level, lacking any support from acrylonitrile ones, which have reversed its trend this month. The commodity has changed hands at €1,750—1,800/t DEL Eastern Europe. PBR has been available for sale at around €1,400/t FCA Eastern Europe in July.
Some market players hope for some improvements in Asian region in long-term perspective, which would help revive trade in Europe as well. According to the data released by the China Association of Automobile Manufacturers, total month-on-month vehicle sales increased by 7.5% in June 2019 in China. This news has made some market players more optimistic about future SR market development. However, China’s car sales are still much lower this year than in 2018, having shown a year-on-year 9.6% decline in June and a 12.4% one in H1 2019.
Trade in synthetic rubber is unlikely to rally at least until early September. The market will remain oversupplied in August. Prices will depend mostly on changes in feedstock quotations. The August MCP for styrene and butadiene is under negotiation now. Styrene, unlike butadiene, may appreciate somewhat.