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Lacklustre Downstream Procurement Slackens the Market Growth of NBR in Early Q2 of 2023
Lacklustre Downstream Procurement Slackens the Market Growth of NBR in Early Q2 of 2023

Lacklustre Downstream Procurement Slackens the Market Growth of NBR in Early Q2 of 2023

  • 12-Apr-2023 5:05 PM
  • Journalist: Jacob Kutchner

Hamburg, Germany: In the first week of April 2023, the prices of Nitrile Butadiene Rubber (NBR) have progressed in the southwards direction. The earlier replenishment of stocks has caused a significant slowdown in the market growth of NBR across the German market. In addition, the fears of a larger global banking crisis lingered, weighing upon the pricing dynamics of several elastomers, including NBR. The manufacturers were reluctant to clear off the existing inventories, and as a result, a considerable cutback has been observed in the NBR prices.

Despite a drop in the inflation level reported in March, production activities remained below pre-pandemic levels. As NBR imports were relatively inexpensive compared to domestic production, industrial output in more energy-intensive industries has fallen. The market players were hesitant to procure the materials, as the build-up of inventories has been hampering the market balance in the domestic region. The transportation and shipping costs across Asia and Europe trade routes have also plummeted. As per the ChemAnalyst data, the cost of transporting a 20-ft container from Germany to South Korea decreased by 14.3% in March.

On the other hand, in China, the NBR prices have also tumbled owing to limited inquiries coming from the downstream automotive sector. The sluggish demand has caused the manufacturers to revise their offers for the end-use industries. After the COVID-19 limitations were lifted, the Chinese economy started to revive. Despite it, the Crude Oil demand has not met expectations, and production operations have continued to face pressure since terminal procurement was based on rigid demand. The ChemAnalyst database has demonstrated that the NBR prices have demonstrated a decline of USD 35 per ton in the week ending 07th April.

According to the pricing intelligence of ChemAnalyst, the declining demand from the downstream automotive sector might prompt a downward pressure on the price realizations of NBR in the European market. The still-high inflation and tight monetary conditions will continue to pressure the purchasing sentiments of end-use industries. In addition, the cost support from upstream raw materials was also limited. Thus, the price trends of NBR are anticipated to remain bearish in the forthcoming weeks.

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