Dips and turns in store for synthetic rubber market
13 Feb 2024
Global SR market finds itself at a crossroads as we journey into 2024, writes Karan Chechi, founder & director at ChemAnalyst
This year could potentially see the synthetic rubber market embark on a path that leads to a sustained downward price trajectory amid a complex interplay between global economic factors, market dynamics, and industry-specific challenges.
One of the primary drivers steering this course is the global crude oil market: despite the ongoing production cuts by OPEC+, which are set to extend until March 2024, crude oil has been trading downwards with little sign of an imminent upturn.
This trend is not just a fleeting moment but is projected to be a sustained bearish pattern throughout the fiscal year. This outlook casts a favourable light on feedstock prices, including key synthetic rubber components like butadiene, ethylene, and propylene. For synthetic rubber producers, this could mean reduced costs, but the market's response remains uncertain.
In Europe, the pricing trends of polybutadiene rubber (PBR) and EPDM rubber offer a glimpse into the market's pulse. The fourth quarter of 2023 saw PBR prices in Germany decline by 13% compared to the previous quarter.
This downward trend, influenced by ample inventory levels and a lacklustre enthusiasm among buyers, is anticipated to continue into 2024. EPDM Rubber shares a similar story, with a 10% decrease in prices over the same period.
The underlying cause?: A cautious approach by buyers, wary of higher prices in the face of sufficient stock and muted demand from downstream industries such as tire and automotive...