Asian Tire Plant Collectively Resists Raw Material Supplier Price Increase

Asia's major tire manufacturers, which were deeply affected by the weak export market, have recently been bailing in their own hands to resist the intention of increasing prices of polybutadiene rubber makers. Asian polybutadiene rubber producers plan to raise the price of products delivered in February and March 2012 by 300 to 500 US dollars (t price, the same below).

Affected by the continuous and substantial increase in raw material butadiene prices, butadiene rubber producers reported prices of 3,600 to 3,800 U.S. dollars (CFR, Asia) in February and March on January 19, up from 10 in January. %.

A tire manufacturer in India stated that we are very dissatisfied with the current situation, because at the end of November last year when raw material butadiene prices fell to 1,500 US dollars, butadiene rubber manufacturers did not adjust prices downward. The current market sentiment is still weak, so we will not accept butadiene rubber producers' attempts to significantly increase prices in February and March.

According to ICIS data, as of the week of January 13, Asian butadiene prices have risen to US$3050 to US$3,100 (CFR, Northeast Asia), which is nearly doubled from the price two months ago. However, Asian tire manufacturers are currently under pressure from the weak export market. In a weak global environment, any drastic increase in product prices is difficult to implement.

Asia is the world's major tire production center, and a considerable portion of its output is exported to Europe. At present, Europe is experiencing a debt crisis and demand has dropped significantly. According to data from the European Automobile Manufacturers Association, despite the significant increase in the number of newly licensed cars in the euro zone’s largest auto market, the number of newly licensed cars in the European Union decreased by 1.7% year-on-year in 2011. According to the association, most of the automotive markets in Europe fell in 2011, with France falling by 2.1%, the United Kingdom by 4.4%, Italy by 10.9%, and Spain by 17.7%. In 2011, the number of new licenses in Germany reached 3.17 million, an increase of 8.8%. According to the China Association of Automobile Manufacturers, the growth rate of China's auto sales and production in 2011 was 2.45% and 0.84% ​​respectively, which was the lowest level in 13 years.

The slowdown in global car sales growth has made tyre manufacturers’ attitudes more cautious. A tire manufacturer said that due to the continued spread of the debt crisis in the Eurozone and the impact of the global economic outlook, Asian tire export growth in the first quarter of 2012 is expected to slow or remain flat. They are currently very cautious and are not preparing to build inventory. In the first quarter, it will not accept a substantial increase in polybutadiene rubber prices. On the other hand, polybutadiene rubber producers are also working hard to cope with the losses caused by the continuous rise in raw material prices for butadiene. A polybutadiene rubber manufacturer in Northeast Asia said that the prices of raw materials butadiene and polybutadiene rubber are currently at almost the same level. We are experiencing losses. The sharp increase in raw material butadiene has eroded all of us. Profit.

According to the ICIS data, the price of Asian polybutadiene rubber for the week ending January 12 was 3250 to 3400 U.S. dollars (CFR, Northeast Asia), and the spread between butadiene and butadiene was only 200 to 300 U.S. dollars. For polybutadiene rubber manufacturers, to make a profit, the spread must be kept at 600-700 dollars. Under these circumstances, some polybutadiene rubber manufacturers in China, South Korea, and Taiwan, China have already adopted production cuts to cope with the sharp rise in raw material costs. A polybutadiene rubber manufacturer in Taiwan, China, said: “We have already suffered a loss and we plan to reduce the operating rate of the plant to 70% in February.”