Improved Demand Dynamics Accelerate the Pricing Dynamics of NBR at the Start of May 2023

In the first week of May 2023, the prices of Nitrile Butadiene Rubber (NBR) has observed to be on upper levels. The automotive sector across the world has faced several headwinds, such as volatile energy prices, raging inflation, and supply-chain disruptions due to COVID-19 restrictions in the last few quarters. However, China's post-COVID economic recovery and gradual strengthening of the automotive sector amidst a steady drop in inflationary pressures coupled with a plunge in production costs across the European region led by falling TTF natural gas prices, has been responsible for the upshift observed in the price realizations of NBR.

The ChemAnanlyst database has shown that the prices of NBR have increased by approximately USD 30 per ton on the week ending 5th May, compared to last week's prices in France. The procurement from the major importing country, Germany, has improved; however, most market transactions were of small orders. The turmoil brought on by worker's strikes, which was sparked by President Emmanuel Macron's pension reform proposal, started in January but picked up steam in March and April, prompting manufacturing activities to remain on low levels. As per the market sources, Electricite de France SA (a major provider of Electricity in France) has lost roughly €1 billion ($1.1 billion) in production due to labor disputes at nuclear and hydroelectric plants.

Furthermore, In India, one of the leading downstream market players, Maruti Suzuki, has reported an increase in its retail sales in Q1 2023, owing to better economic conditions. Moreover, some production cuts in April 2023 have kept the market sentiment buoyant. A healthy growth in the country's GDP, a slew of new product launches, and positive consumer sentiments have build-up the momentum for the procurement of input raw materials, including NBR. Furthermore, a rise in the automotive sector has reinforced the market fundamentals of NBR across the domestic region of China, South Korea, and the USA in the same timeframe.

According to the pricing intelligence of ChemAnalyst, the market value of NBR will likely demonstrate an upwards trend across the regional market. The inquiries from the downstream automotive sector are also expected to escalate with improvement in economic conditions. However, an expected further round of interest rate hikes to rein in still-high inflation in the European region might impact the market fundamentals of NBR.