European NBR Market Held Steady Amid Economic Pressures and Average Terminal Demand
European NBR Market Held Steady Amid Economic Pressures and Average Terminal Demand

European NBR Market Held Steady Amid Economic Pressures and Average Terminal Demand

  • 16-Jul-2024 8:11 PM
  • Journalist: Bob Duffler

Hamburg, (Germany): In Germany's domestic market, Nitrile Butadiene Rubber (NBR) prices have maintained steady levels amidst average demand from the automotive sector. This stability comes despite upward pressure from rising Butadiene costs, which have been balanced by sufficient supply. However, the recent surge in Brent crude oil prices has intensified production expenses for NBR manufacturers, prompting adjustments in pricing strategies.

Meanwhile, Germany's construction sector continues to struggle, dampening overall demand for NBR products used in building materials. This downturn reflects broader economic challenges and uncertainties since early 2023. Additionally, limited inquiries from Germany, exacerbated by ongoing inflationary pressures, further impact market dynamics. Recently in energy markets, Russia has emerged as Europe's primary gas supplier, overtaking the US, amidst disruptions in US LNG exports and maintenance on Russian pipelines. Despite this, European natural gas futures have declined driven by weak demand and ample inventories. In addition, Shipowners have encountered higher insurance premiums due to increased vessel risks, especially in the Red Sea. This has led to reroutes around the Cape of Good Hope, resulting in higher fuel consumption and extended travel times. Consequently, US shippers have integrated a "land bridge" strategy, transporting goods across the country from West to East Coast ports by rail or road.

On the other hand, As per the market participants, Japan has noted subdued demand for NBR, as inquiries from downstream industries, have been moderate and narrowly focused on immediate needs. This limited procurement has dampened market sentiments, reflecting the current state of low demand for NBR in the region.NBR Manufacturers and suppliers have been adapting their strategies amidst fluctuating market conditions, aiming to maintain a balanced supply chain. In the automotive sector, new car sales have continued to decline for the sixth consecutive month in June, with a year-on-year drop of 4.9% and a month-on-month increase of 19.6%. This ongoing decrease in vehicle sales has further dampened demand for NBR, as the automotive industry remains a significant consumer of this material.

According to pricing insights from ChemAnalyst, NBR prices are expected to stay elevated in the European market. The reduction in manufacturing activities coupled with rising energy prices are likely to keep the NBR market sentiments buoyant. Additionally, On a positive note, Germany's annual inflation rate eased to 2.2% in June 2024 from 2.4% in May, potentially alleviating NBR cost pressures for end-use industries. This development offers a glimmer of hope amidst broader economic challenges affecting market sentiment and demand across various sectors.

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