Subdued Downstream Demand Slackens the Market Growth of Nitrile Butadiene Rubber
- 24-Nov-2022 5:04 PM
- Journalist: Timothy Greene
The fears of a looming recession and subdued demand have impacted the market growth of Nitrile Butadiene Rubber (NBR). The COVID-19 outbreaks and consequent tightening of prevention and containment have weighed down the manufacturing activities in one of the significant growth drivers of the global economy, China.
The price of NBR remained in negative territory entering the last week of November 2022. The market players have reported that the downstream inquiries from the automotive sector were insufficient, increasing the pressure on the existing inventories. The persistent downturn in demand dragged down market sentiments. Furthermore, Beijing's "zero-covid" policy has caused logistics disruption and a plunge in ocean shipment volumes. Witnessing the deteriorating COVID situation, the auto association has canceled the China Automotive Overseas Development Summit. The ChemAnalyst database shows that the ex-factory prices of NBR have plummeted by USD 65 per tonne from the first week of November and settled at USD 2065 per tonne on November 24th, 2022.
Furthermore, Germany is working speedily to construct onshore LNG terminals to reduce reliance on Russian gas imports. The German government rented five floating terminals to import Liquefied Natural Gas (LNG), called Floating Storage and Regasification Units (FSRU). Moreover, the entire exercise is currently accounted for at €6.56 billion, up from €3 billion in the 2022 budget, disrupting the overall market fundamentals of several chemicals, including NBR.
In the USA, officials from the Federal Reserve anticipate that falling commodity prices and the unblocking of supply chain bottlenecks will slow down the rapid inflation rate. The downstream automotive sector has yet to strengthen much. As a result, the CFR Los Angeles price of NBR fell this week.
As per ChemAnalyst, the rebound in the automotive sector can uplift the market fundamentals of NBR. However, foreseeing the current economic situation, the prices of NBR are anticipated to continue their downward rally amid falling raw material costs and a decline in market shipments in the forthcoming weeks.