Steady Rise in US FKM Prices in mid Nov amid emerging demand
- 16-Nov-2023 2:31 PM
- Journalist: Francis Stokes
Texas, USA: Despite a dip in light vehicle sales across the US market in October, impacted by a six-week strike at major automakers such as Ford, General Motors (GM), and Stellantis, the price of FKM experienced a steady rise in the first two weeks of November. This unforeseen rise in FKM prices was influenced by a notable 5% increase in German car registrations throughout October. The price hike was primarily driven by a rebound in sales of battery-electric cars after a September dip caused by the discontinuation of government incentives for business buyers. New car sales in Germany surged for the month, with a remarkable 4.3 percent upsurge in full-electric car sales.
Amidst a significant backlog of demand in the automotive sector, the demand for FKM soared, leading to a slight uptick in its market value by the week ending on November 3rd. This surge was unexpected considering the slump in US vehicle sales due to the strikes at major automobile manufacturers. Furthermore, the US Manufacturing Purchasing Managers' Index (PMI) for October registered a stable situation and a slight improvement from September due to the gradual rise in business activities among the private sectors, boosting the Purchasing Index. This uptick indicated a halt in the five consecutive months of decline that the manufacturing sector had experienced previously. The stabilization provided a more favourable environment for the FKM market but did not immediately alleviate the impact of the sales decline.
However, logistical challenges persisted as shipping delays occurred in the Panama Canal due to lower water levels in Gatun Lake. These delays forced ships to wait for passage, affecting the transportation of crucial materials for various industries. The drought conditions in Panama were partially attributed to the El Niño effect, marked by elevated temperatures in the central and eastern tropical Pacific Ocean. Despite these challenges, the supply of FKM remained unaffected, and moderate levels of inventories were available. The fluctuations in the automotive market and the impact of supply chain disruptions due to the Panama Canal delays have created an environment of uncertainty for materials like FKM. While the German electric car sales surge had a positive influence on demand, the strike-related effects in the US market continue to pose challenges.
As per ChemAnalyst anticipations, “The price of FKM is expected to rise in the rest of November before declining throughout December. The conclusion of the six-week-long strike by Union Auto Workers against General Motors at the end of October is expected to boost automobile production in November, consequently increasing the demand for FKM. However, with the start of December, FKM manufacturers and traders are likely to prioritize clearing off their inventories, potentially leading to a significant decrease in FKM prices as they aim to clear out stocks, even if it means cutting their profit margins.”