SBR Prices Recover in the USA Amid Improved Automotive Performance

USA- Styrene Butadiene Rubber (SBR) price momentum turned northwards in the first week of June on account of a better demand outlook and a rise in sales of automotive industries in the country. According to industry (synthetic rubber and automotive) experts, new car sales in the United States increased in the domestic market due to strong demand for personal transportation and improved dealer inventories. Despite the contraction in the country's Purchasing Manager's Index (PMI), the overall auto industry in the United States is making a strong comeback as it overcomes pandemic-related hurdles and capitalizes on favorable market trends. Moreover, US federal officials and economists are anticipating a rise in the interest rate in the country. These facets have equally contributed to governing the overall market dynamics of SBR in the US market. Price quotations for SBR in the first week of June 2023 were observed at USD 2170 per MT, CFR USGC in the US market.

The recovery of inventories and the introduction of appealing incentives were critical in propelling the spike in SBR prices. Another factor that increased US SBR prices was the increase in offers offered by some automakers and dealers (passenger vehicles and tire manufacturing units) to increase demand and entice potential customers. These incentives provided financial discounts and created a sense of urgency, encouraging buyers to place higher orders as a ripple effect SBR price increase. Moreover, North American labor markets have remained tight, with slow unemployment rates and recurring worker shortages.

However, the US Federal Reserve's monetary tightening began to have an impact on employment in industries such as construction, manufacturing, and retail that relied significantly on bank credit to finance their operations. As a ripple effect, the SBR manufacturers and buyers showcased better product inquiries in the sixth month of 2023. As economic activity slows, the unemployment rate is expected to rise significantly but remain low by historical standards in the second half of 2023.

As per ChemAnalyst, SBR prices are expected to follow the inclined price trend in the US market on account of the continuous demand outlook. The SBR industry has made significant progress in its recovery, but the road ahead is not without challenges. Rising interest rates and upcoming economic difficulties put a shadow of doubt over the industry's sales momentum as we approach the second half of 2023. Moreover, the sales for used cars remained tight in the country, and the index, which analyses vehicles sold at its wholesale dealership auctions in the United States, is likely to fall further this year due to improved new vehicle inventory levels and high borrowing rates that appear to be frightening off consumers.