Rising feedstocks costs and US demand drives Belgian TPE market, Manufacturing activities continue to contract across Eurozone

Antwerp (Belgium): In February 2023, the second half witnessed a marginal increase of 0.5% in the prices of Thermoplastic Elastomer (TPE) in the Belgian market, attributed to inflation in the prices of feedstock Styrene and Ethylene, which surged by approximately 18% and 7%, respectively.

The Belgian TPE market sustained momentum driven by restocking activities in the US import market, where automotive sales rebounded. The inflation in feedstock prices, Styrene, and Ethylene further contributed to this trend. Additionally, upstream Benzene prices surged by approximately 14% during the same period, adding to the production costs of TPE.

In February 2024, automotive sales across the US import market rebounded by approximately 8%, with further anticipated growth in March 2024. Major US automotive manufacturers witnessed a sales increase of more than 10%, providing strong support to the Belgian TPE market, prompting manufacturers to stock up on TPE inventories.

However, demand for TPE from the Chinese import market remained low due to continued market sluggishness in the Chinese New Energy Vehicle (NEV) market. Major automotive manufacturers experienced declining sales, with overall automotive sales depreciating by approximately 30% in February 2024.

Despite healthy demand from the US market, the domestic Eurozone witnessed sluggish sales in petrol and diesel cars, primarily contributing to the marginal price increase of TPE. Overall rising automotive sales were attributed to increasing Electric Vehicle (EV) sales, notably seen in France, Germany, Italy, and the UK, where total new registrations reached 815,690 vehicles. However, the European automotive market experienced a contraction of approximately 5% due to consumer preferences shifting towards petrol and EVs, driven by regulatory changes across Europe and emission concerns in the diesel market, negatively impacting TPE demand.

Regarding manufacturing activities, the downturn in demand for goods manufactured in the Eurozone continued for a fourth consecutive month in February 2024, with factory orders shrinking and expectations of further decline into March 2024. However, manufacturers in the Eurozone managed to clear pending orders, albeit with a noticeable increase in the pace of depletion compared to the start of the year. Despite declining employment levels for the tenth consecutive month, backlogs were reduced.  Overall, a lack of demand throughout the supply chains caused input prices to continue declining and lead times for purchases to shorten. That was despite some claims that the disruption in shipping across the Red Sea was causing greater transport costs and delays.

Overall, TPE prices are expected to increase across the European market due to anticipated downstream demand from the US market, along with rising production costs of feedstocks Styrene and Ethylene, and upstream Benzene, as restocking of petrochemicals continues globally.