Prices of styrene-butadiene rubber, the core raw material in most consumer tires, should be relatively stable this year and next, according to market research expert Bill Hyde, senior director of olefins and elastomers at IHS Inc., chemicals unit.

Mr. Hyde indicated SBR prices in the U.S. are more than double what they were before the beginning of the recession in 2000. The trend is even higher in Western Europe and Asia.

At the same time, the SR business is undergoing significant changes, Mr. Hyde said, noting his company's research shows commodity rubber use continues to grow in China — from 30 percent of global demand in 2012 to 35 percent in 2017 — while consumption will fall by a percentage point or two in the other regions of the world.

The big dynamic, he said, is in production. There is a great amount of solution and emulsion SBR, as well as polybutadiene, capacity being installed in China.

While production capacity increases flatten out in forecasts for the 2015-17 period in that nation, the IHS executive said his company doesn't believe it.

"I don't think anyone believes there will be no addition of capacity then (2015-17), but it's just that no one has announced plans with that much lead time. We do believe there will be continued capacity added in China."

That will have an effect on SR makers in other regions.

"Rubber producers that have traditionally shipped into China are now in some cases going to find other locations to sell their material." he said.

Source: tirebusiness.com