In July 2025, Asian TDAE prices diverged, falling in Malaysia on weak automotive demand and crude oil prices, while rising in India amid supply constraints, port congestion, currency weakness, and festive-season stocking. Outlook for August remains bearish due to macroeconomic pressures and seasonal demand slowdown.
In July 2025, the Treated Distillate Aromatic Extract (TDAE) market in Asia showed divergent performance, with prices going down by 1.5% in Malaysia and up by 1.6% in India. Price movement in the different regions was influenced by different supply situations and demand from the automotive sector.
TDAE prices in Malaysia continued their declining trend over the period, largely due to muted overseas demand from the motor vehicle industry and the persistent weakness in Asian crude oil benchmarks, which damped any substantial jump in production costs. Sentiment was additionally dampened by unfavourable month-on-month trends in major importing markets. In the UK, car sales declined sharply by 26.74%, and South Korea also showed a 5.5% drop in overall vehicle sales as an indicator of weak end-market consumption. These declines in car production and sales lowered procurement volumes for TDAE, thus putting further pressure on Malaysian export offers.
China reported another month of annual growth in its automotive sector in July, but the month-on-month drop in car sales was considerable at 12.0% while new energy vehicle sales experienced an even steeper drop of 54.7%, further suppressing regional TDAE consumption. Although stable domestic output of TDAE, coupled with slightly less pronounced declines in new orders, hinted that operations were settling, external demand weakness remained the primary headwind.
Conversely, TDAE prices in India rose, led by isolated supply conditions and consistent demand from a diversified automotive industry. As import streams from South Korea and the United States continued unabated, prolonged congestion at Malaysia's Port Klang, where ships experienced up to 70 hours of waiting time, pushed some shipments, reducing regional availability. Logistically, intra-Asia shipping rates posted significant falls, declining 13% in early July and another 8% later that month, relaxing the cost of transportation. The weakening of the Indian rupee diminished some of these savings by making dollar-priced imports more expensive. The seasonal buying for the next festive season also led buyers to stock up, putting additional pressure on prices.
From a demand perspective, TDAE purchasing activity remained modest amidst mixed performance of end-user automotive sector. India's overall auto retail fell by 4.31% YoY due to a high base from July 2024 and excessive monsoonal rains. However, tractors expanded by 10.96% YoY and 14.9% MoM due to an increase in agricultural subsidies and strong rural liquidity. Commercial vehicles posted a small YoY gain of 0.23%, aided by institutional orders. Sales of two-wheelers and construction equipment fell due to weak rural movement and seasonal slowdown. Though trends were mixed and may follow a seasonal pattern, market sentiment for a post-monsoon recovery was enough to promote a stable offtake of TDAE from downstream rubber product manufacturers.
Looking ahead to August 2025, TDAE prices are expected to come under downward pressure as both macroeconomic and seasonal factors weigh on demand. Rural spending is likely to remain restrained amid heightened macroeconomic uncertainty following the imposition of a new 25% U.S. tariff on Indian exports, a move that could suppress vehicle sales and reduce downstream consumption of TDAE in tire and lubricant applications. Additionally, forecasts of above-normal monsoon rainfall raise the risk of floods and landslides in eastern and peninsular India, potentially disrupting transportation networks and industrial activity. Such logistical and operational interruptions are poised to curtail lubricant additive usage, reinforcing a bearish outlook for TDAE in the coming month.
