Polyolefin Elastomer Price witness stability in Europe and surge in US amid mixed downstream market demands

As of the third week of February, the Polyolefin Elastomer prices in the European market have remained stable, while a marginal increase has been observed in the US market. The economic scenario in Europe is currently experiencing a recession, leading to underperformance in various sectors such as Automobile and Construction. In contrast, the US market's economic factors indicate robust growth, particularly driven by demand in the Construction sector. These contrasting economic conditions have played a pivotal role in influencing the demand for Polyolefin Elastomer in their respective regional markets.

In the US market, the price of Polyolefin Elastomer saw a slight increase, reaching 2780 USD/MT FOB-New Orleans by the third week of February. This marks a 0.72% increment from the first week of February. The rise in the price of Polyolefin Elastomer can be attributed to the upward movement in the feedstock market, particularly the surge in ethylene prices, and the subsequent impact of increasing Crude Oil prices on monomer costs. In January, monthly vehicle sales in the United States experienced a 5.6% decline, totaling 15.0 million units. Despite a decrease in the average daily selling price (DSR) over a 25-day period from 43,622 to 43,042, which represents the first year of decline in DSR over the past sixteen months, unadjusted sales volumes saw a 2.8% increase compared to the previous year, reaching 1.08 million units. Passenger car sales experienced a year-on-year growth of 1.4%, while light van sales saw a 3.1% increase. Notably, light trucks represented 80% of last month's sales, maintaining their share from January 2023. Despite the decline in vehicle sales, positive growth in the construction sector, coupled with overall economic activity and increased demand in foreign markets, contributed to the price surge in Polyolefin Elastomer during this week.

In the European market particularly Spain, specifically in February's third week, the price of Polyolefin Elastomer remained stable at 2560 USD/MT FOB-Barcelona. This stability persisted from the first week of February, reflecting the mixed performance of the economy. The moderate activity observed in the Crude Oil market in recent sessions has had a direct impact on Olefin monomer prices. The favorable pricing of Natural gas has further buttressed Ethylene prices, allowing suppliers to maintain ample inventories. The early availability of these inventories acted as a buffer, shielding Polyolefin Elastomer prices from the recent upswing in feedstock prices during the current week. Turning to the downstream automobile market, there were 68,685 units sold in January 2024, indicating a 7.07% increase on a year-on-year (YoY) basis. However, on a month-on-month (MoM) basis, there was a 16% decline.

According to ChemAnalyst's projections, the Polyolefin Elastomer market is expected to experience a stable to bullish trend in the near future. The revival of the European economy, albeit at a slower pace, is anticipated to be a key driver for the increased demand for Polyolefin Elastomer. The ongoing Red Sea crisis poses a potential threat by disrupting the supply chain of raw materials, and assumptions include a possible rise in freight charges, contributing to higher production costs for Polyolefin Elastomer. On a positive note, optimism is expected from the US market, which is likely to influence the demand for Polyolefin Elastomer in upcoming sessions.