European demand buoys Synthos synthetic rubber business

Warsaw – Increased demand from the European automotive industry helped Synthos Group’s synthetic rubber segment to increase first-half earnings by 1.7 percent, to PLN119 million (€28 million), on sales of PLN1,029 million – 4.6 percent above the prior-year amount.

For the six months to 30 June, the Polish polymer and chemicals maker said an increase in butadiene prices – linked to recovery in crude oil markets – improved margins on synthetic rubbers, as did a rise in natural rubber prices in the second quarter.

The positive trends were, however, largely offset by economic slowdown in China. This, said Synthos, had limited the profit-generating capacity of the company and of other European synthetic rubber manufacturers.

Of the volume of products sold in by Synthos’ rubber segment, 85 percent goes to large tire industry players, including Michelin, Continental, Bridgestone, Goodyear and Pirelli. The remaining 15 percent is used in the production of technical rubber, soles for footwear, flexible cables and transmission belts.

Compared to the first half of 2015, demand in the replacement tire market in Europe was stable in the case of passenger cars and trucks, but fell in the agricultural vehicle sector.

Passenger cars tire sales, in the first half of 2016, grew by 2 percent  – 102,574 million tires were sold – and for trucks 3.6 percent – 3.683 million tires were sold. There was a 7.8-percent decrease in sales of tires for agricultural vehicles in the first half.

Looking ahead, Synthos said “real growth of the demand for tires is expected in the Asian markets, including China and India and, to a smaller extent, South American markets, mainly Brazil.”

And, said the group, profitability was affected by the long-term impact of the regulations concerning tire labelling, resulting in an increased demand for Nd butadiene rubber and solution styrene butadiene rubber (S-SBR) rubber.

Another important factor influencing the rubber segment results in the near future will be the increasing use of the production capacity of its S-SBR installation launched in 2015.

Synthos is continuing to obtain specification approvals for product from the 90-kilotonnes-per-annum S-SBR plant in O?wi?cim. The group said it also began regular supplies of S-SBR in the second quarter of this year.