POM prices anticipated to Increase across the US and Mexican markets

Prices of Polyoxymethylene (POM) have remained stable in the US market due to stable prices of feedstock Formaldehyde, which stabilized production costs and due to the creation of an adequate gap between demand and supply. However, the prices of the POM are expected to witness appreciation as the demand for electric automobiles grows across the US and exports to the Mexican market increase, largely backed by the advancing festive season.

Across the US market, the downstream automotive industry witnessed no significant surge in sales, with only a marginal increment of 2.5% being witnessed in November, which did not pressure the existing inventories of POM. However, the automotive industry in Mexico witnessed a significant surge in automotive sales, increasing by almost 15% in November 2023. This strong demand for POM is expected to extend towards December 2023 as the purchasing sentiments of the local populace continue to improve due to the advancing festive season. The demand for POM from the automotive sector in the US has also witnessed a healthy turnaround as purchasing sentiments improve. Moreover, automotive parts and accessories sales increased by 0.5% in November, further pressuring POM's existing inventories.

The secondary demand for POM from the electronics sector remained largely subdued, with retail sales in the US market dropping by 1.1% in November, as reported by the US Department of Commerce. Healthy discounts were reported to have been offered by major retail chains such as Walmart and Best Buy to attract consumers amidst the already improved purchasing sentiments generated by the offers and discounts accounting for Thanksgiving Day and Black Friday sales in November.

Across the importing Mexican market, even though prices of POM have stabilized due to the existence of an adequate gap between existing imports from the United States and demand and stable production costs, further increments are anticipated, largely backed by increasing automotive sales as the festive season advances. Nearshoring activities in Mexico are expected to show an effect from the year 2024 as major automotive industries shift their manufacturing centers from the United States to Mexico.

Moreover, the healthy performance of the electric automotive sector is also anticipated to continue pressurizing the key market players of POM as major automotive players transition their manufacturing lines to the electric automotive sector, where POM finds the most application as opposed to sconventional internal combustion automobiles. Additionally, production costs of POM are anticipated to increase as prices of Formaldehyde increase due to increased demand from the resin industry.