European POM Prices Tumble Amidst Sluggish Downstream Support and Healthy Inventory Level in Jan 2024

At the outset of 2024, the Polyoxymethylene (POM) market in the European region experienced a downward trend, primarily attributed to subdued demand from downstream automotive and related sectors. The increased supply in the market has led to diminished support for POM prices. Deals for POM were moderate, with downstream users showing limited interest in stockpiling and preferring to make purchases at lower price levels. As a ripple effect of these market dynamics, the cost of POM witnessed a decline of 4% during January 2024 in the German market.

In January, the weakening business activity in the German market has further intensified the challenges, casting a shadow on the demand for POM. The driving force behind the continued price decline can be traced back to the subdued orders received from the downstream automotive manufacturers. As the automotive industry faces its own set of challenges, including supply chain disruptions and decreased consumer spending, manufacturers have scaled back their production, consequently reducing their demand for POM. Consequently, workforce reductions were limited to the manufacturing sector, which experienced a decline in employment for the several months, marking the swiftest rate within this ongoing sequence. While the manufacturing Purchasing Managers' Index (PMI) in Germany slight improved compared to December, it stayed below the baseline, suggesting a purchasing activity fall in January.

In terms of demand, the POM market faced challenges as fresh orders from potential customers remained weak in January. Furthermore, trading activities in the international market witnessed a decrease, largely due to disruptions in ocean routes. Furthermore, the decrease in export sales, particularly noticeable in the European market, alleviated some pressure in January. Businesses observed a hesitancy among customers, which can be attributed to the prevailing political and economic uncertainty, alongside elevated financing costs.

Meanwhile, in Germany, sales of new cars experienced a decline in January, with a notable plunge in demand for electric cars. This decrease follows a robust month in December, characterized by a surge in customer purchases driven by purchase bonuses and subsidies for electric vehicles before the incentives expired.

It is anticipated that the cost of POM in the German market may decline in February due to bearish conditions in downstream automotive and related sectors. The availability of POM in the European market appears to be sufficient to meet domestic requirements for the month of February. This expectation suggests that market forces, including soft demand and ample supply, may contribute to a potential decrease in POM prices in the German market during the upcoming month.