Traditional Dip in Demand stabilized EPDM Prices in South Korea in late December

EPDM rubber prices have rolled over in the last week of December, epitomizing demand decline towards the end of the year caused by the winter holiday season in the Republic of Korea. Market participants remarked that the consumption levels have dropped in the last few weeks of the year stemming from drop-in EPDM rubber offtakes. After a consistent rise in EPDM rubber prices throughout the last quarter, stability in prices came as some reprieve for buyers.

Earlier in Q4, the rising cost of raw materials and volatility in energy feedstocks have increased the overall cost of production for EPDM rubber, which further translated into increased prices of the material as manufacturers and suppliers look to keep their margins. Both Lotte and Kumho have announced price increases for the material leaving Korean ports. Meanwhile, buyers were observed having backseats in pricing assessments as suppliers maintained the upper hand. Demand from downstream sectors has been strong, pressuring market participants to keep the uptrend in the overall pricing.

Supply side dynamics tightened in H2 of Q4 as Covid induced restrictions caused limited port activities and, therefore vessel congestions on several ports. A similar trend has been observed in other regions where congestion in Chinese ports led to waning container availability, resulting in an increase in freight charges in the last few weeks across major trade routes.

As per ChemAnalyst, “EPDM rubber market is expected to improve in the Q1 2022 where demand is likely to gain momentum in the initial months of the year. However, global resurgence in Covid cases can derail the above momentum and may send a wave of conservatism in the domestic and international markets. Spike in Covid case is also likely to test the nascent recovered supply chains and may further result in sudden rise in freight charges after some reprieve in Q4.”