Tepid Terminal Demand Pressures the Market Growth of NBR Towards the Q4-End

Hamburg, Germany: Over the past two months, the challenging economic environment has pressured the market fundamentals of Nitrile Butadiene Rubber (NBR). The European NBR market has been battered by persistent inflationary pressures and volatile energy costs. In addition, the weak economic conditions in the US and Chinese markets have been weighing upon the market sentiments of NBR.

Over the past few weeks, the prices of NBR have demonstrated no changes in France's domestic market. The demand from the downstream automotive industries has remained moderate and hasn't led to developments in NBR's price realizations. In addition, the procurement from the German market was also observed to be inadequate as it has been facing significant challenges in its downstream construction and automobile sectors. As per the market sources, The German new-car market recorded 245,701 deliveries in November, down 5.7% year on year, fuelling the bearish market sentiments.

Furthermore, despite the lower operating rates of the manufacturing firms, the availability of NBR finished goods was sufficient, and the NBR market has stabilized as no supply-chain bottlenecks have been observed. On the other hand, in the past few weeks, crude oil prices have sharply dropped, particularly in recent sessions, following the underwhelming announcement by OPEC+ about their intentions to reduce production further in 2024. Furthermore, although Europe has notably decreased its reliance on Russian gas, it still faces vulnerability to natural gas supply disruptions and price fluctuations due to the absence of safeguards or reserves within its system.

On the other hand, China has been facing challenges in its foreign trade this year due to a lackluster global demand and a stalled economic recovery. The inquiries from the downstream Automotive industries have remained moderate amidst the year-end. The cost support from upstream Butadiene was also limited as its prices remained stagnant in the given timeframe. Amidst the ongoing destocking season, the NBR manufacturers were observed to be more inclined towards the release of the existing inventories. There was no significant pressure on the supply side as the availability of NBR goods remained sufficient to meet the terminal demand.

According to ChemAnalyst's pricing intelligence, NBR's prices will likely remain bearish towards the end of the fourth quarter of 2023. The tepid demand from the downstream Automotive industries is likely to dominate the market sentiments. In addition, the decline in crude oil prices is also expected to exert downward pressure on NBR's price realizations in the near term.