Stearic Acid Prices Fall in USA as Supply Conditions Ease and Demand Cools

The first half of April 2024 witnessed prices of Stearic Acid (Rubber Grade) across the US market depreciate by approximately 3% due to depreciating prices of the product across the exporting Indonesian market.

Prices of Stearic Acid across the Indonesian market was recorded to have depreciated by approximately 1% during this timeframe leading to the arrival of inexpensive inventories in the US market.

The US Stearic Acid during this timeframe was primarily driven by low demand from the EV automotive sector and subdued demand from the summer tire industry. As a result of reduced demand from the EV automotive sector, major automotive manufacturers across the US market were recorded to have slowing production of EVs as consumer preferences shift to hybrid automotives.

In the first quarter Tesla produced over 433,000 vehicles and delivered approximately 387,000 vehicles, which was almost 9% below the 423,000 it sold in the same quarter of last year and was the first year-over-year quarterly sales decline in nearly four years. The business attributed the decrease in part to plant shutdowns caused by shipment diversions at its Fremont, California, production, where it was gradually implementing an improved version of the Model 3 vehicle in the Red Sea, and an arson attack that knocked out power to its German factory, a possibility for the slow consumption of Stearic Acid.

This consequently alleviated the pressure from the downstream rubber sector, leading to a reduced demand for Stearic Acid (Rubber Grade). Moreover, purchasing activities in the downstream summer tire industries were recorded to have subdued after the termination of winter season in mid-March 2024, consequently leading to low demand for Stearic Acid (Rubber Grade)

Additionally in terms of manufacturing activities, the US manufacturing sector continued to expand during March 2024. In March, manufacturers reported a strong and faster-than-expected increase in production—the fastest growth rate in over two years. The fact that new orders increased for the third consecutive month further demonstrated the stronger demand. While still strong, the rate of expansion was slower than in February. The total number of new orders increased faster than the growth in foreign business, which was barely noticeable in March. Due to forecasts for stronger economic conditions, increased marketing activities, and increased capacity, firms maintained their confidence that output will expand during the upcoming quarters leading to positive outlooks for the imports of Stearic Acid.

Prices of Stearic Acid (Rubber Grade) across the US market are expected to depreciate as prices of feedstock Palm Oil are expected to witness a slowdown across the exporting Indonesian market.  This is expected to reduce the production cost of Stearic Acid (Rubber Grade). Moreover, in the upcoming months, the ACP (Panama Canal Authority) is also expected to add extra slots to the Panama Canal which is expected to increase the daily number of transits to 34 as a seasonal rainy weather advances the Latin American continent, thus easing drought conditions and consequently easing freight charges and supply conditions of Stearic Acid (Rubber Grade) into the US market.