AKRON—Prices for synthetic rubber and petrochemical feedstocks have been "incredibly volatile" and are likely to remain so for a while, according to a speaker at the International Tire Exhibition & Conference in Akron Sept. 11-13.
"Energy- and economy-related fundamentals in the synthetic rubber market are encouraging, but risks abound," said Bill Hyde, executive director-olefins and elastomers at IHS Markit.
Meanwhile, natural rubber pricing is largely to remain soft because of oversupply and the need for small farmers to keep on earning a living, according to Hyde.
Spokespersons for various industry sectors generally agreed with Hyde, especially in his assertion that ethylene is the main driver of pricing in the petrochemical and SR world.
"Ethylene is the center of the petrochemical universe," he said. "It has a lot of co-products, most importantly butadiene. Ninety percent of all the butadiene produced in the world is a co-product of ethylene."
There is enough ethane in the U.S. to produce 20 million to 22 million metric tons of ethylene annually, according to Hyde. In Asia—where ethylene is produced mainly through cracking naphtha—ethylene production has lagged behind the U.S., where abundant natural gas is the main source. This results in higher prices for Asian EPDM.
South Korean EPDM maker Kumho Polychem Co. announced a price increase of 7 cents per pound effective Sept. 1. High ethylene prices were the reason, according to Mike Sibley, managing partner-EPDM, for Intertex World Resources Inc., exclusive North American distributor of Kumho Polychem EPDM.
Ethylene represents 65 to 70 percent of the cost of EPDM, Sibley said. "When it goes up as it has in the last year or so, it's a huge hit," he said.
Ethylene prices in Asia topped out at $400 per ton, compared with $350 per ton in the U.S., according to Sibley.