Global Neoprene Rubber Prices Surge Amid Increased Trading Activity and Rising Production Costs

In the global market, the price of Neoprene Rubber witnessed a notable surge this week. This increase is in the Neoprene Rubber price is primarily attributed to heightened activity from suppliers who are accumulating inventory in response to improved overall demand from the downstream market, particularly in key sectors such as automotive and construction. Additionally, the price of Butadiene, the main feedstock for the production of Chloroprene monomer, also experienced a significant increase in the Asian market. This rise in Butadiene prices has further contributed to the upward pressure on Neoprene Rubber prices.

The heightened demand from various industries, coupled with limited supply and strategic stockpiling by suppliers, has exacerbated the price escalation. Overall, these factors have combined to create a market environment where Neoprene Rubber prices are experiencing considerable upward momentum.

In Japan, Neoprene Rubber prices have risen this month, influenced by fluctuations in the feedstock market, particularly Butadiene prices. While Butadiene experienced a notable rise in recent months, it saw a slight decrease of 5.36% in May. According to the Japan Automotive Dealers Association, the automotive sector saw sales of 312,406 units in May 2024, reflecting a year-on-year decrease of 4.4% but a month-on-month increase of 0.66%. Meanwhile, Denka Corporation, a major elastomer manufacturer in Japan, reported valuation losses on inventories in fiscal 2023 due to higher fixed costs and stagnant global demand. However, despite expectations of declining Chloroprene sales prices in fiscal 2024, a recovery in demand may reduce these valuation losses. Conversely, the Chinese market has shown positivity in the manufacturing sector, particularly in automobile sales, which has supported an uptick in Neoprene Rubber prices. Despite this, the Nikkei 500 Rubber (NRUB) index indicated no significant positive performance, suggesting manufacturers are struggling with depleting margins amid rising feedstock prices and other operating costs of Neoprene production. According to the latest data from the Trading Statistics of Japan, Neoprene Rubber exports to overseas markets totalled 501 MT in April, bringing the year-to-date export total to 1,373 MT, marking a decrease of 90.49% from March.

Neoprene Rubber prices have surged this month in the German market. Meanwhile, the price of Butadiene has continued its upward trend, driven by tight supply, leading to further increases. Over the past year, Butadiene has seen a substantial rise of 58.92% and a 3.52% surge in the last month alone. In the downstream market, data from the German Federal Motor Transport Association indicated a decline in passenger car registrations in May, falling to 236,425 units, representing a 2.75% decrease month-over-month and a 4.27% decline year-over-year. In the aerospace market, HTM Helicopters placed an order for one Airbus H145 helicopter with options for two additional units. Additionally, the German Ministry of the Interior ordered up to 44 H225 helicopters for its Federal Police, with 38 firm orders and options for six more. This large order significantly boosts Neoprene Rubber consumption in the aerospace sector. Despite challenging conditions in the construction sector during the second quarter, there were improvements in supplier delivery times. However, lower demand for construction materials impacted purchasing costs.

According to ChemAnalyst anticipations, the price of Neoprene Rubber is expected to showcase bullishness in the upcoming sessions. This bullishness in the Neoprene Rubber price is primarily linked to the ongoing activity in supplier's accumulation practices. Moreover, the feedstock Butadiene price is continuing to rise, which is expected to further increase the production cost of Neoprene Rubber for manufacturers.