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US Stearic Acid Prices Stabilize Amidst Healthy Demand and Declining Production Costs
US Stearic Acid Prices Stabilize Amidst Healthy Demand and Declining Production Costs

US Stearic Acid Prices Stabilize Amidst Healthy Demand and Declining Production Costs

  • 11-Dec-2023 12:36 PM
  • Journalist: Patricia Jose Perez

Prices of Stearic Acid (Rubber Grade) have been recorded to maintain stability in the US market despite prices of feedstock Palm Oil declining in the first week of December 2023, which was supposed to have eased production costs. The prime reason for the stable market of Stearic Acid (Rubber Grade) is attributed to the adequate circulation of inventories and the high demand anticipated from the downstream automotive industry owing to the expected improvements of the local populace due to the upcoming festive season.

The prime reason for the stability in the prices of Stearic Acid (Rubber Grade) was largely attributed to stable demand from the prime automotive industry, evidenced by the marginal increment in sales, which appreciated by only 2.5% in November 2023. Furthermore, demand for Stearic Acid (Rubber Grade) from the downstream tire industry was recorded to be high, as indicated by the financial reports of Yokohama Rubber Corporation Limited, as business profits and operating ratio increased by almost 28.6% and 9.5%, respectively in the third quarter of 2023 with anticipation of further increments in the revenue during the last quarter of 2023 bolstering the demand for Stearic Acid (Rubber Grade).

Furthermore, Yokohama Rubber Corporation Limited observed an increment of sales in the replacement tire market across the United States, with operating earnings increasing for the ninth consecutive month with profits in the winter tire segment increasing by 13.6%, with further increments anticipated in the last quarter of 2023, clearly indicating the presence of strong demand for Stearic Acid (Rubber Grade). Additionally, the demand for Stearic Acid (Rubber Grade) from the PVC processing sector was recorded to be stable, with prices being largely stable before depreciating by 0.7% in the first week of December 2023. This consequently created an adequate gap despite declining production costs, which was countered by the high demand in the US market, stabilizing the prices of Stearic Acid (Rubber Grade).

Additionally, the economic situation of the United States displayed minor improvements, with inflation rates easing to 3.2% according to the FRED and manufacturing activities gaining momentum with the completion of backlogs and the moderate influx of new orders from international and domestic clients. Hikes in the interest rates are not expected until January 2024, which largely forecasts an improvement in the purchasing sentiments of the local populace in the downstream automotive industry, and business sentiments are expected to be in the positive territory, further complemented by the upcoming festive season improving the demand for Stearic Acid (Rubber Grade).

Overall, prices of Stearic Acid (Rubber Grade) are expected to increase due to the upcoming festive season as imports from the exporting Indonesian market are anticipated to show a hike in prices due to increased demand, which is complemented by the festive season and a requirement for winter tires. This is expected to add further pressurize the existing inventories of Stearic Acid (Rubber Grade) in the US market despite declining prices of feedstock Palm Oil across the exporting Indonesian market.

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