Abstract
This paper investigates or examines the causal links between price of styrene butadiene latex (SBL) and other domestic variables such as supply, demand, Herfindahl Hirschman Index (HHI), price of styrene, and price of butadiene during the period of 1995–2017 on the monthly basis.. Results from Augmented Dickey Fuller (ADF) or unit root test showed that the stationary state of the whole variables is of first difference (I). The Granger pairwise causality test revealed a bidirectional causality of SBL with BTD(Butadiene), SBL with STY(Styrene), SUPP(Supply) with DMD(Demand), DMD with STY, DMD with BTD and STY with SUPP and vice versa. Johansen test found out a co-integration of SBL prices. However, this study proved no significant links between the price of SBL and supply of SBL (SUPP) in the long and short run. This paper highlights the fact that SBL price has a significant direct impact in the long run on the styrene (STY) and butadiene (BTD) prices, as well as HHI. Similarly, these aspects also have a significant direct impact proved by the positive coefficient in the long run on the SBL pricing. The findings further showed that the price of SBL has a connection and significant direct impact on the negative arrow for the short and long run equilibrium, in line with the price and demands for SB Latex, pressing and oil classification.
Highlights
Petrochemical product derivatives, namelySB Latex, can generally be affected by the increase in crude oil prices in the global market, because if crude oil or crude oil increases, it will indirectly increase the prices of the main raw materials, namely styrene prices and butadiene prices (Fan, 1998)
This paper investigates or examines the causal links between price of styrene butadiene latex (SBL) and other domestic variables such as supply, demand, Herfindahl Hirschman Index (HHI), price of styrene, and price of butadiene during the period of 1995–2017 on the monthly basis
The data consist of SB Latex production capacity in Indonesia from the three SB Latex manufacturers (SUPP: Supply), SB Latex level of demand from industrial users of SB Latex (DMD: Demand), the main raw material prices that are the prices of Styrene (STY: Styrene) and Butadiene (BTD: Butadiene), as well as market share or SBL industrial structure in Indonesia (HHI: Herfindal Hirschman Index) and OIL (Global Oil Price)
Summary
SB Latex, can generally be affected by the increase in crude oil prices in the global market, because if crude oil or crude oil increases, it will indirectly increase the prices of the main raw materials, namely styrene prices and butadiene prices (Fan, 1998). Styrene Butadiene Latex (SB latex) industry is one of the petrochemical industry products that are still the mainstay of Indonesia in providing the main raw material for paper coating industry and carpet backing. The ups and downs of production supply depend on the demand for coating paper. SB latex industry in Indonesia is an industrial intermediate for the paper industry and carpet In line with the growing development of paper industry in the Jurnal Ekonomi Pembangunan, ISSN 1411-6081, E-ISSN 2460-9331
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