US Butyl Rubber Prices Hike Amid Rising Auto Sales and Deteriorating Manufacturing Sector

Texas, USA: After being stagnant in May, the US Butyl Rubber market showcased a significant incline in the pricing trend, with a rise of 2.5% in June. Though the price of Butyl Rubber does not fluctuate much often, June witnessed optimism in the market. As per ChemAnalyst researchers, there could be only two possibilities behind the surge in Butyl Rubber prices, a notable hike in downstream demand and a downturn in the upstream side of the market. The downstream automotive industry boosted during the considered month, and the US manufacturing sector contracted further, indicating a positive outlook for the Butyl Rubber market.

As per the US Bureau of Economic Analysis, the sales of the automotive industry were observed to be approximately 13% more in the first half of 2023 than it was in the first two quarters of 2022. The data provided by US Bureau indicates that the first half of 2023 experienced a flourishing market sentiment for the automotive industry.

Sales of new light vehicles in the US increased more than 20 percent in June compared with the same month in 2022 as consumers continued to make purchases despite rising prices and higher interest rates. Improved supply chain efficiencies, pent-up demand from the COVID-19 pandemic, and improved dealer inventory levels drove the increase in sales, which further encouraged the rise in Butyl Rubber prices. Dealer inventories have been declining due to global microchip shortages and supply chain disruptions. The chemical industry has faced several headwinds in recent years due to declining dealer inventories due to global supply chain disruptions. However, the increased popularity of the EVs and Hybrid vehicles market is expected to have boosted the demand for automobiles. This improvement in auto sales raised the consumption of Butyl Rubber in the domestic as well as global market.

Furthermore, as per market reports, the seasonally adjusted Purchasing Manager’s Index (PMI) was reported to be 46.3 in June, which was 48.4 in May. The reports indicate that the US manufacturing sector showcased further contraction in the considered month. Amidst a drastic fall in new orders for different commodities and a downturn in industrial outputs, the manufacturing sector contracted to a greater extent. As the condition of the manufacturing sector worsened in June, the production of Butyl Rubber got affected, eventually causing a depletion in its inventories, further supporting the hike in Butyl Rubber market value.

As per ChemAnalyst anticipations, “The price of Butyl Rubber is likely to keep increasing in the US market till the end of the third quarter of the year, on the back of upsurged consumption in the automotive industry and expected increment in its upstream cost.”