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Isoprene Rubber's global market remains stable amid cautious procurement strategies
Isoprene Rubber's global market remains stable amid cautious procurement strategies

Isoprene Rubber's global market remains stable amid cautious procurement strategies

  • 29-Jan-2024 2:29 PM
  • Journalist: Peter Schmidt

Tanjung Priok, Indonesia: In the global market, the prices of Isoprene Rubber witnessed stability in its trend, during the week ending on 26th January 2024. The stability in the prices of Isoprene Rubber showcased the supply and demand equilibrium. Moderate demand from downstream sectors such as automotive led buyers to approach procurement cautiously, aiming to prevent oversupplies of Isoprene Rubber. Buyers adopted an on-demand procurement strategy rather than bulk purchasing for the Isoprene Rubber, while sellers sought opportunities for profit by maintaining their positions. The cautious approach from buyers and profit-seeking by sellers contributed to the stability of Isoprene Rubber prices. Despite the increase in the energy cost to the incline in the prices of crude oil and adding up to the production cost for Isoprene Rubber the prices remained stable due to moderate demand from the downstream sectors.

In the Indonesian market, the price of Isoprene Rubber maintained its stability at USD 3520/MT (CFR-Tanjung Priok) with the week ending on 26th January 2024. Despite a rise in the number of manufacturers and production capabilities, Indonesia has experienced stagnant annual auto sales, hovering around 1 million for the past ten years, and lagging behind Thailand. Experts in the industry attribute this slow growth to an unfavorable tax system. With intense competition among numerous participants and a surplus production capacity of over 2 million in Indonesia, serving a market of just 1 million is deemed inefficient. To rejuvenate the sector, industry insiders propose that the government implement tax policies conducive to business and offer doubled sales as incentives to encourage more investments. Considering the market situation, the trade inflows from the Malaysian market to the Indonesian market were done at a slower rate.

At the same time, the Isoprene Rubber market witnessed a moderate demand in the USA from the downstream Automotive sector along with sufficient inventory levels which led to a steady price trend for the Isoprene Rubber. Following a robust sales rebound in 2023, the automotive industry seems poised for a more gradual growth trajectory this year, with consumers grappling with heightened interest rates and elevated prices for new cars. Throughout the past year, the Federal Reserve has substantially increased interest rates, leading to significantly higher costs for potential car buyers. However, the adoption of many of the latest electric models has been hampered by consumer resistance to their steep prices. Additionally, a reluctance to transition to battery power stems from concerns about the availability of convenient and quick refueling stations. This scenario has compelled automakers to reevaluate and adjust their strategies.

Furthermore, European automakers are preparing for a period of slower growth this year, prompted by a decline in sales for the first time in 17 months. In December, new vehicle registrations experienced a 3.8% drop to 1.05 million units, as reported by the European Automobile Manufacturers’ Association. This downturn was particularly notable in Germany, the region's largest market, where sales plummeted nearly a quarter. The decrease was attributed to the lower enthusiasm for electric vehicles (EVs), which had a ripple effect on growth in other significant countries. The declining enthusiasm for EVs played a crucial role in this shift in the automotive market dynamics.

As per ChemAnalyst, the prices of Isoprene Rubber are anticipated to decline due to the declining demand from the downstream Automotive enterprises along with the accumulated existing inventory levels. Therefore, the market players are expected to lower their quotations to clear out their inventory levels. Additionally, the prices of Crude Oil might showcase an incline in its trend which may contribute to a lower purchasing activity from the buyer's end further resulting in a decrease in the prices of Isoprene Rubber.

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