Despite the Increase in Automotive Sales, US SBR Market Shows Mixed Sentiment

Texas- January 2023 witnessed a progressive automotive market in the US region because of better market offtakes and accelerated job growth. The economic conditions have improvised in the country when compared with the official data from the previous quarter of 2022. Styrene Butadiene Rubber (SBR) has major applications in the manufacturing of commercial automotive tires. The demand for the product has inclined, yet the prices of SBR remained static in the first week of February 2023. The price quotations ranged between USD 2400 to 2570 per MT, CFR USGC (USA). 

The US completely depends on Asian countries for semiconductor import, which impacts the automotive industry production proportionally. The incline in production of the same consequently raises the demand for SBR in the regional market. The global shortfall of semiconductors is still present; however, there are some conflicting indications for 2023. Based on statistics and market insiders, it is anticipated that the market for downstream (rubber) will continue to be constrained far beyond 2023, significantly impacting the SBR prices.

However, a few automotive industries continue to drive firm demand for the product, proportionally influencing the demand for SBR. Now, rather than coping with shortages on a regional basis, SBR producers are keeping an eye on and assessing their inventories to ensure they have the proper product to cater to the demand where it is peaking and prevent a potential oversupply of chips from sectors where demand is declining.

As per ChemAnalyst, some relief might appear in the second half of 2023. Apart from the economic conditions, the prices for SBR are also governed by the feedstock (styrene and butadiene) prices which industry gets impacted by the crude oil prices in the international market. Moreover, the Biden government had already imposed the CHIPS (Creating Helpful Incentives to produce Semiconductor and Science) Act in August 2022. This act aims to decline the dependency of the US government on Chinese manufacturing units for microchip production, consequently focusing more on domestic production. The prices for SBR are expected to incline in the regional market.