Average Downstream Demand Weighs on European Nitrile Butadiene Rubber Prices

Hamburg (Germany): After experiencing a stable upward trend at the beginning of Q2 2024, the prices of Nitrile Butadiene Rubber (NBR) have stabilized across the European market. Steady procurement from downstream automotive industries has led manufacturers to maintain stable prices in Germany’s domestic market. However, challenging macroeconomic conditions in Europe continue to impact the manufacturing sector, resulting in subdued NBR demand in both residential and commercial sectors. Despite rising Butadiene prices, average demand from the downstream automotive industries has weighed on NBR market sentiments.

Germany’s central bank has indicated that the German economy experienced a slowdown in the summer, attributed to sluggish domestic consumption, reduced international demand, and higher interest rates. ChemAnalyst data shows that NBR prices settled at USD 2,440 per ton in the week ending May 17. Market sources indicate that price competition with Asian markets has also influenced NBR prices. Customers are anticipating reduced NBR prices and are shifting their focus to China and Thailand, where glove manufacturers offer more cost-effective products due to lower energy costs in those regions.

In South Korea, the inflow of new inquiries from downstream automotive industries has been improving, strengthening the market fundamentals of NBR. One of the leading manufacturers of NBR, Kumho Petrochemical, recorded sales of 1.6675 trillion won and an operating profit of 78.6 billion won in the first quarter. This marks a 3.1% and 40.4% decrease from the same period last year, respectively. However, compared to the previous quarter, sales and operating profit have shown recovery, increasing by 10% and 123.7%, respectively. The company noted improvements across its entire business, including in synthetic rubber, synthetic resin, phenol derivatives, and special synthetic rubber. In Q1 2024, Kumho Petrochemical's synthetic rubber business saw sales of 595.5 billion won and an operating profit of 25.1 billion won, up 12% and 64% from the previous quarter, respectively. This was driven by a demand recovery and increased sales of high-value-added products. The outlook for the second quarter is uncertain due to expected cautious government purchasing and stabilizing raw material prices.

According to ChemAnalyst pricing intelligence, NBR prices may start to decline as demand from downstream automotive industries is not expected to show major spike in the European market in the coming. The market for NBR latex is anticipated to remain weak beyond the end of the year, with any sharp increase in demand from the gloves and automotive industries unlikely to materialize. However, demand recovery in the Asian market might lead to a contrary price trend for NBR.