New Beginnings are In Order as the New Year Approaches. Can We Say the Same for EPDM Rubber Market?
- 29-Dec-2022 2:45 PM
- Journalist: Patricia Jose Perez
If we ignore minor fluctuations, EPDM Rubber prices have mostly been declining globally since the last two quarters. Looking at the pricing trend, we can see that 2022 was not the year for EPDM Rubber in terms of price consistency or hikes. Now, what? Will the year 2023 bring a bouquet of hope for EPDM Rubber? Or would we get to witness the same old pricing trend? Whatever the outcome, one thing is sure the arrival of the new year will surround elastomers, including the EPDM Rubber market, with curiosity.
Until now, the world has survived several waves of covid, the Russia-Ukraine war, energy crunches, fear of inflation, and the scarcity of semiconductors, and so did the market for EPDM Rubber. Several cases of new covid variant BF.7 have recently been reported worldwide, and the uncertainties regarding upcoming market trends have increased manifolds. If this covid variant stays for long, it will undoubtedly impact the market movements, industrial outputs, and supply of several commodities. Christmas bells have already rung; now, it's time for the arrival of 2023; whether it would bring confetti or not is something worth witnessing.
2021: In a Nutshell
If we analyze the data for the year 2021 carefully, we will come to an understanding that the EPDM Rubber prices showed a consistent increase all through the year across the globe. However, a significant hike was observed at the end of the year. We know that is interesting, but what is more interesting is that the price rise was witnessed in almost every region; still, the factors backing up the price increase varied in different regions.
Now let's move forward and talk about North America, more specifically, the USA; the EPDM Rubber prices soared there in the last quarter of 2021 on account of the rising market value of the catalyst Metallocene, primarily used in the manufacturing of EPDM Rubber. As catalyst prices increased in the market, so did the manufacturing cost of EPDM Rubber and hence its market value. Other crucial factors, such as feedstock Ethylene and Propylene prices were stagnant along with consistent natural gas prices, so clearly, they were not causing price hikes.
Energy being the primary concern of Europe ever since Russia-Ukraine tensions came into play, was the factor behind the price surge of EPDM Rubber in Europe during the last quarter of 2021. If we leave energy crunches aside for a minute, market tightness would be another reason. As per several market researchers, imports were limited at that time of the year, and the supply was short. Not to forget that Europe was also dealing with crude oil price hikes during the quarter, which could pose a reasonable argument behind the EPDM Rubber price increase.
Moving forward, Volatile energy prices and increased feedstock market value were the two major factors causing an increment in the EPDM Rubber prices in the Asia-Pacific region during the last quarter of 2021. Back then, major players like Lotte and Kumho announced price increments in the EPDM Rubber exports from South Korea, making it expensive for the importing countries. Additionally, importers did not have much choice as EPDM Rubber was in high demand then.
The year 2022 started with a strong note for the EPDM Rubber market; however, the consumer sentiment faded as the year moved forward. However, somewhere between the 1st and 2nd quarter, significant growth in the EPDM Rubber market was observed worldwide, mainly because of the inflationary pressure and the rising market value of feedstocks.
What's Hot in EPDM Rubber Market Right Now!
As they say, let bygones be bygones; Now let's talk about EPDM Rubber's current market scenarios.
Currently, the EPDM Rubber market has been showcasing a downward pricing trend worldwide as there is no significant demand for EPDM Rubber. The two major downstream industries, automotive and construction, have been experiencing low sales and productivity, eventually leading to lesser inquiries for EPDM Rubber.
Furthermore, as December accounts for the destocking of yearlong reserved inventory, market participants are now focused on clearing off their shelves; hence they are offering the commodity at a lesser price. Additionally, the ongoing festivities and winter holidays have restricted the market movements, hence the lesser offtake of material. Meanwhile, Europe has handled the energy crisis for now as the energy reserves procured in summer have provided the cushion for the LNG prices not to go out of hand and remain under check.
What can we expect in the upcoming quarter (Q1 2023)?
As automotive sales have been recovering, the demand for EPDM Rubber is anticipated to increase in the upcoming weeks. Besides, as the new production will start in January, and there will be limited inventories owing to December's destocking, the supply is likely to be limited. Hence, market participants can expect some optimism in the coming quarter; however, in the age of covid related concerns, nothing can be predicted with certainty. Furthermore, if the cases increased sharply, the world might witness another round of supply disruptions and a demand plunge of key elastomers, including EPDM rubber.