Global demand growth of styrene butadiene rubber (SBR) is expected to strengthen in 2021 and continue further, as sequential demand improvement is expected to be seen in automotive and tyre applications.

Producers are trying to manage short-term adversity while focusing on long-term strategic actions like investments in applications with higher growth and less cyclicality such as solution-SBR (S-SBR), said GlobalData, a leading data and analytics company.

The steep decline in automotive and tyre demand has largely affected the growth of the market.

In these challenging market conditions, companies have reduced capital expenditure for 2020. Trinseo SA, one of the major producers of SBR, had a reduction of capital spending from $100 million to $80-$85 million for 2020.

Companies will continue to prioritise investments in their growth areas to remain competitive and place themselves for sustained growth in the long-term.

Dayanand Kharade, Oil and Gas Analyst at GlobalData, commented: “Automotive production was down in most parts of the world due to plant shutdowns. International and domestic travel restrictions have substantially impacted the SBR demand from the airplane tire segment. However, as inventories continued to build up and demand started to show signs of growth, the SBR market started taking pace. Companies are keeping a close eye on the trends and market conditions to best position themselves for the eventual economic recovery in the near future.”

SBR capacity additions are largely concentrated in China and India, targeting existing and growing demand in these countries. Iran is the third-largest country in terms of capacity additions, leveraging feedstock advantage.

New SBR capacities under construction are facing various issues, which may delay project completion and commissioning. The construction works of the Sinopec Hainan Refining & Chemical Yangpu SBR project had been delayed. However, it was back on track in February 2020.

According to GlobalData, Asia is projected to lead the global SBR capacity additions by 2024.

The global SBR capacity is poised to register a total growth of 8 per cent from 7.92 million tonnes per annum (mtpa) in 2019 to 8.57 mtpa in 2024. Asia leads the capacity additions among the regions and its SBR capacity is expected to increase from 4.17 mtpa in 2019 to 4.62 mtpa in 2024 at an average annual growth rate (AAGR) of 2 per cent, said the leading data and analytics company.

GlobalData’s report, ‘Global Styrene Butadiene Rubber (SBR) Industry Outlook to 2024 – Capacity and Capital Expenditure Forecasts with Details of All Active and Planned Plants’, revealed that Asia is also expected to have a new-build and expansion SBR capacity of 0.45 mtpa from five new-build and expansion projects.

Krishna Teja Pappoppula, Oil and Gas Analyst at GlobalData, said: “Within Asia, China leads in terms of capacity additions with a capacity increase of 0.30 mtpa by 2024, which accounts for more than 65 per cent of the region’s capacity additions.”

 GlobalData identifies India as the second highest country within the region in terms of capacity additions with a capacity increase from 0.48 mtpa in 2019 to 0.63 mtpa in 2024 at an AAGR of 5.4 per cent. Major capacity additions will be from the Indian Synthetic Rubber Panipat SBR Plant with a capacity of 0.10 mtpa by 2024.

Indian Oil Corp, China Petrochemical Corp and Zhejiang Rongsheng will be the top three companies in Asia in terms of planned and announced capacity additions over the outlook period.