European Nitrile Butadiene Rubber ends October 2022 on a Bearish Note
- 01-Nov-2022 4:49 PM
- Journalist: Patrick Knight
In the European region, the pricing dynamics of Nitrile Butadiene Rubber (NBR) have been decelerating since the first week of the fourth quarter. The soaring energy costs have led to production cuts and a reduction in inquiries from the downstream automotive sector, enforcing a downside risk to the demand fundaments of NBR across the major economies of Europe. The industrial sector contributes around 23.4% of the German GDP, and the looming energy crisis has caused an unprecedented impact on the operating costs in the domestic region.
The ChemAnalyst data shows that the price of NBR declined by approximately 3% in October last week on a CFR basis in Germany. The French market has also demonstrated a decrement of USD 115 per ton in NBR Prices in the same timeframe. As per the observed market scenario, domestic car manufacturers have stated that a potential power crunch and high energy costs have hit production capacities. In addition, Germany announced a 200-billion-euro (approximately USD 199 billion) energy relief plan on October 21 to help ease increasing prices for manufacturing firms to address the current energy crisis. On the other hand, inflation spiked by 1.5% last month, reaching nearly 11% in Germany, eroding the purchasing power of end-use consumers.
Furthermore, the government officials of Paris and Berlin have underlined that the European Union must do more to encourage national industries. They have added that France and Germany must stick together as many domestic automotive manufacturers are trading extensively with China. The Covid-pandemic has demonstrated that European countries are very reliant on external supply chains and any hindrances that will significantly impact the price value chain of several commodities, including Nitrile Butadiene Rubber.
As per ChemAnalyst estimation, the prices of Nitrile Butadiene Rubber will remain subdued as the elevated energy costs have undermined the market sentiments of automotive manufacturers. However, Europe has now started prioritizing energy security over clean energy and will soon commence functioning coal mines. It is anticipated that the deployment of the coal units will fortify supply security during the energy crisis in Germany and conserve natural gas for electricity generation in the near term.