PTFE Prices Rise in the USA and Fall in Europe, as the Red Sea Issue Raises Trade Uncertainties

Throughout December 2023, the Polytetrafluoroethylene (PTFE) market prevailed mixed sentiments globally. The market unfolded bearish sentiments during the first half of the month amidst lacklustre performance as the year approached its end, there were minimal signs of activity and persistent weak spot demand. However, prices of PTFE increased significantly during the second half of the month amidst supply chain constraints and heightened freight charges.

In the initial half of December 2023, a pessimistic sentiment pervaded the PTFE market in the United States. The notable decrease in PTFE prices during this timeframe can be primarily attributed to an excess supply of PTFE in the U.S. market, coupled with a diminished demand from the automotive and electric vehicle sectors. Data released by the National Automobile Dealers Association (NADA) revealed that the seasonally adjusted annual rate for new light-vehicle sales stood at 15.3 million units, indicating the second consecutive monthly decline in the seasonally adjusted annual rate. Concurrently, the global market exhibited a subdued stance as producers focused on meeting contracted volumes before potential spot availability in January. However, as the month progressed, the U.S. PTFE market experienced a shift to bullish sentiments, driven by escalated freight charges. According to information gathered from diverse market sources, freight rates from China ports to western U.S. ports increased by around 1.2% in comparison with last month. Meanwhile, ocean rates to eastern U.S. ports witnessed a 5.6% rise from the preceding month. Additionally, some shippers are now avoiding the Suez Canal route due to potential rebel attacks, leading them to seek alternative trade routes. This has resulted in increased transportation costs and the importation of PTFE from the Chinese market at higher expenses. Despite these factors, demand from the downstream electronics and electric vehicle industries remained subdued.

Concurrently, the European PTFE market witnessed a decline in prices during the initial half of December 2023. This reduction is predominantly linked to a decreased demand for the material from the downstream automotive and electric vehicle industry, coupled with an excess availability of the material. Notably, there was a noticeable absence of new orders from the downstream lubricant and automotive sectors throughout the week. The demand from this segment was significantly hampered by reduced economic activities, largely influenced by inflationary pressures across the region. In the broader economic context, the European market reported a positive inflation rate of 3.2% in November 2023 compared to the previous month, according to the European Statistics Department, providing a contextual backdrop for the market dynamics. Moreover, there remained a persistent lack of indications for a revival in downstream automotive demand for PTFE during the first two weeks of December 2023. However, as the month progressed, the German. PTFE market experienced a shift towards bullish sentiments, driven by heightened freight charges. The recent attack on Red Sea trade by Yemeni rebels has led to multiple assaults on commercial vessels, raising concerns about the safety of maritime traffic in the region. This disruption in Red Sea trade is anticipated to have a substantial impact on global PTFE supplies.

According to ChemAnalyst, there is an expectation that PTFE prices will persist at lower levels in the upcoming months. This projection is based on the sustained decline in demand from the downstream industry.