In October, Polyacrylate Rubber (ACM) prices improved in both India and China, primarily due to strong automotive demand. In India, price rose 0.6% with both passenger vehicles and two-wheeler sales hitting all-time highs supported by the effect of the GST 2.0 implementation, festive buying, and improving rural incomes. Inventories eased as domestic supply was in line with lifting consumption, while slight tightness in Chinese imports created some mild upward pressure. Even though upstream was stable, automotive demand was the primary driver. In China, Polyacrylate Rubber price increased 1.1% on a FOB basis driven mostly by strong production of new energy vehicles (NEVs). Total vehicle sales improved, with NEVs increasing and representing total vehicle sales, which significantly drove Polyacrylate Rubber consumption in battery and high temperature sealing applications. A slight reduction in costs upstream for butyl acrylate did very little to provide cost relief downstream, and when added to strong demand, all kept the market firm. Overall, the market balanced below steady supply, tight inventories, and demand holding prices firm.
Polyacrylate Rubber (ACM) markets demonstrated strong upward momentum in October with solid automotive demand in India and China. Polyacrylate Rubber prices on a CFR basis increased 0.6% in October, driven by strong vehicle sales attributed to GST 2.0, the festive season, and increases in rural incomes. Passenger vehicle sales grew 11% versus 2022, while two-wheeler sales increased an impressive 52% Friday 6 October, achieving the highest level of retail sales in history during the month. Strong rural markets, due to favourable harvests and increases in rural life inventory spending, contributed to the jump in demand, particularly for two-wheelers and entry-level passenger vehicles. Overall, automotive demand performance led to stronger demand for Polyacrylate Rubber because of its use in producing heat- and oil-resistant products such as engine seals, EV battery components, and various under-the-hood needs.
In India, Polyacrylate Rubber inventory levels decreased to around 53–55 days, indicating an improvement in the balance between supply and demand compared to previous months. Domestic manufacturing activity was steady, and local manufacturers were able to keep supply steady. However, mild tightness in imports of polyacrylate rubber from China as India's main polyacrylate rubber supplier put some slight upward pressure on CFR values. Upstream Butyl acrylate had also experienced mild fluctuations upstream, but the overall cost environment did not have much impact on polyacrylate rubber pricing because automotive consumption remained the largest driver. Processors in India were forward proactively managing inventory levels of polyacrylate rubber to accommodate the sharp increase in order levels and reduced inventory levels by 5 - 7 days in key automotive grade categories. The broader outlook for polyacrylate rubber prices points to firm pricing and expects to continue as retail vehicle momentum through the festive season continues and the launch of new models supports production levels.
In China, the price of Polyacrylate Rubber, on an FOB basis, was up 1.1% from September to October, largely due to strong demand from the NEV sector. Month-on-month growth did ease but year-on-year demand was still robust, driven by NEV continued penetration into the market, stimulating demand for polyacrylate rubber as a critical component into battery systems, high temperature or hot sealers, and other key polymer components utilized in the electric and hybrid vehicle space. The upstream butyl acrylate market in China gave net costs relief of 0.9%, but this had little impact on polyacrylate rubber pricing based on continued strong demand. Producers were operating at high utilization rates and carefully managing inventories to service both domestic market requirements, as well as export. Demand of polyacrylate rubber in several grades was tight, and global demand continued to be steady, which kept the market firmly balanced, supporting the increase seen in polyacrylate rubber prices into October.
Polyacrylate Rubber prices are likely to stay stable in the short term with robust automotive output, continued elevated demand for new energy vehicles and the positive consumption momentum from the festive season providing further support. Existing manufacturing rates and tight inventories of polyacrylate rubber will limit the downside. We expect to maintain a positive but cautious market sentiment as we move into the coming weeks.
