Polyoxymethylene Prices Remain Steady in the US and Europe Amidst Stagnant Feedstock Formaldehyde Costs

Polyoxymethylene (POM) prices have largely stabilized in the US market in the first half of October after appreciating by almost 0.5% in the third week of September. This was largely due to stable costs of feedstock Formaldehyde, which kept production costs constant.

Demand for POM from the downstream automotive industry and electronics industry had largely subdued after September when automobile sales increased by almost 19%. This was largely due to a slow performance of the automotive industry as the Federal Bank continued to increase interest rates with a higher possibility of further increments in December 2023 as inflation rates were not curtailed.

Purchasing sentiments amongst the local populace were largely restrictive as procurements were made as per requirements. Demand from the industrial industry, where POM finds applications in the manufacture of gears, belt straps, and bearings in the machining sector, was also not healthy as the Purchasing Producers Index also increased with an appreciation of 0.4% being recorded in September with the anticipation of further increments in October 2023. The current inflation rates across the United States stand at 4.5%, with the possibility of further increments as the Federal Bank is again expected to hike interest rates by 25 basis points in December, which are likely to increase further input costs and factory gate charges. Demand from the prime importing market of Mexico was also moderate, as even though electric vehicle sales surged, prices of POM were recorded to have stabilized.

Internationally, Prices of POM have largely stabilized, as indicated by stable prices of POM in Germany due to unchanged production costs, which is attributed to stable costs of feedstock Formaldehyde, which largely prevented prices of POM from fluctuating. Across Europe, even though sales of automobiles surged, as indicated by the tripling of sales in the United Kingdom and an increase by an average of almost 10% in France, Netherlands, and Belgium, the stable costs of feedstock prevented the prices from fluctuating across Europe. Confidence for investments by major automotive manufacturers in the European automotive industry was yet to recover as problems in the existing supply chain system resurfaced after COVID-19, which are yet to be mitigated.

Overall, prices of POM are anticipated to increase as prices of upstream Crude Oil are expected to increase towards the end of the last. The demand for POM is also expected to strengthen as the electronic automotive industry gradually strengthens. With current investments from major automotive manufacturing players for establishing manufacturing facilities in Mexico and a large exodus from China, prices of POM are expected to return to a bullish market situation.