Polyolefin Elastomer Prices Hike on Account of Rising Automotive Manufacturing
- 01-Nov-2022 4:40 PM
- Journalist: Francis Stokes
Several European industry associations have jointly expressed concerns about rising energy prices and increased production costs straining the EU's automotive ecosystem. Rising energy prices, coupled with high cost of raw material Butene and other components is negatively impacting the Polyolefin Elastomer (POE) and its downstream sectors. As a result of rising production costs of POE, profitability is being undermined, causing investments and the survival of key industries within the automotive ecosystem to be threatened.
Inflation in the Eurozone has reached a high value of 10.7% in October which in turn put inflationary pressure on the prices of automotive market. The shortage of skilled workers is growing into a hefty burden for the economy which is causing the federal republic USD 86 billion per year. There was an approximate percentage change of 3% in the prices of POE within the regional market.
The prices of POE were observed to be increasing in the European region with rising demand pressure from downstream automotive industry and the ongoing energy crisis, although it is seeming to end with drop in gas price, but LNG prices could rise in the upcoming months amid demand spike in winters. The increase in POE prices has a more significant impact on European market. We expect that half of the eurozone countries will experience negative growth (higher prices) of POE for at least upcoming two quarters due to the challenges faced by the European economies.
High costs also jeopardize employment in an industry that supports 11.5% of European Union manufacturing labour, noted the statement, which also called for similar conditions across the European Union. The logistics backlogs resulting from COVID-19 shutdowns and a shortage of semiconductors have now been complicated by rising energy costs and potential power outages.
Germany approved a 199 billion USD energy relief package on October 21 to help ease skyrocketing prices for industries and households. The country's car makers suffer a blow from the ongoing energy crisis, thus impacting the costs of POE. The inventories of POE were down due to higher consumption from automotive industries and this caused lower stockpiling of the product.