The price of the Polybutadiene Rubber (PBR) in the US market showcased a moderate upside in late November, as steady supply, sustained foreign demand, and slowly stabilizing prices improved confidence within the marketplace. PBR inventories continue to be relatively high, however, much of the increased purchasing activity has come from the automotive and certain industrial sectors, which has provided additional stability to the marketplace. Participants within the marketplace noted that there was still ample availability of PBR, but there have been some indications of tightening spot negotiations.
The moderate upside in the PBR price was driven by incremental improvements in downstream activity following October’s mixed performance. U.S. vehicle sales of 1,273,378 units continued to underpin demand for components relying on PBR, particularly seals, gaskets, hoses, and vibration-damping parts. Additionally, the impact of the tire sector also had a positive effect. In the America’s market, Goodyear’s tire volume increased by 5% (19.6 million units) over the previous year. Although there was a decrease in US consumer replacement sales (-4%) and the overall US tire industry declined by 9%, gains in commercial replacement volume (+1%) and a 2% increase in non-USTMA imports support baseline offtake of PBR for both replacement and commercial channels.
Demand for products from overseas has also provided additional support. In the leading markets for exported vehicles, registrations of passenger vehicles in the Netherlands increased by 34,724 units (+9.03% from previous year +7.84% from last month), while sales in Mexico rose to 129,736 (+10.71% from last month). These increases will support demand for PBR-based seals and vibration control applications. At the same time, Belgium experienced a 6.8% decrease year over year (33,955). This decreases, combined with weak construction activity in the Eurozone, has resulted in inconsistencies in consumption across Europe. As a result, exporters reported that increased orders from stable markets were able to raise the number of inquiries for PBR products, which enabled suppliers to place large amounts of excess inventory in a more efficient manner than they could during the beginning of the quarter.
PBR production remained consistently high on the domestic supply side due to a sufficient amount of butadiene feedstock and effective plant operation. Although storage levels were higher than normal for seasonality, strong export sales combined with disciplined purchasing strategies prevented any additional accumulation of stock. The establishment of a ceiling price for butadiene by producers allowed producers to reduce their immediate cost pressures as butadiene costs declined at that time. However, as demand indicators improved during late November, producers began to issue slightly stronger PBR prices.
According to ChemAnalyst's outlook, PBR prices will likely experience modest growth over the next few sessions due to automotive production remaining strong, demand for commercial tires increasing, and improving international order books. PBR demand to continue increasing slightly because feedstock cost should remain stable, and inventory levels will continue to decline at similar rates as they have been over the last few months. It is predicted that PBR prices will be supported by an increase in replacement tire sales and the return to a normal purchasing cycle as December approaches.
