For the Quarter Ending September 2023
The pricing trends of Polyphenylene Sulphide (PPS) exhibited a sluggish pattern in July, with gradual improvements in the subsequent months. This shift was notably influenced by the uptick in raw material prices in the U.S. market during the third quarter of 2023. Within the Automotive sector, a key downstream industry for PPS, there was an overall decline in demand throughout the quarter. This decline could be primarily attributed to the rise in interest rates and the inflationary pressures affecting the U.S. region. Companies operating in this sector reported that reduced new sales were a consequence of customer hesitancy and a decreased motivation to spend, particularly in the face of challenging demand conditions. Manufacturers within this sector further reduced their input material procurement, both pre- and post-production inventories, as part of their efforts to optimize stock levels and implement cost-cutting measures amid subdued domestic and international demand. The weakened demand for input materials also had an impact on supplier delivery times, which gradually improved throughout the entire third quarter as vendor performance adapted to these market conditions.
During the third quarter of 2023, the price trajectory of Polyphenylene Sulphide (PPS) within Asian markets displayed a notable decline when compared to the previous quarter. This downward trend was chiefly attributed to the subdued performance of key downstream sectors, namely the Automotive and construction industries. The Automotive sector encountered challenges, primarily driven by reduced domestic market orders, which were significantly influenced by the escalating interest rates that adversely affected the demand for PPS. Furthermore, in the latter part of the quarter, raw material prices experienced an upswing due to the global increase in crude oil prices. This increase was primarily instigated by production cuts initiated by OPEC+ countries during the third quarter. Within the Thai market, the pricing dynamics of PPS mirrored those of other Asian markets, as it relied on imports to fulfill its domestic demands. Moreover, the overall demand from the Asian Automotive industry remained lackluster, resulting in the accumulation of PPS inventories in various regional markets across Asia.
In the European market, there was a slight improvement in the price of Polyphenylene Sulphide (PPS) compared to the previous quarter. This improvement was driven by heightened cost pressures stemming from increased prices of raw material and crude oil. Despite this uptick in PPS prices, companies reported that the widespread global economic downturn was negatively affecting demand across various geographical regions. Further, the downstream Automotive industry in the Eurozone region faced a bearish trend, and this can be partly attributed to the influence of higher interest rates. The combination of these factors contributed to the overall pricing and demand dynamics in the European PPS market. Concurrently, data from Eurostat revealed an increase in producer prices in the European industrial sector as a whole, rising from 137.1 in July 2023 to 137.7 in August 2023. This indicated an incremental improvement in product consumption within the European market during Q3 2023 and contributed to the overall price uptrend for PPS in the region.
For the Quarter Ending June 2023
As per the assessment, Polyphenylene Sulfide prices fluctuated in the US market during Q2 2023. As per the data, Polyphenylene Sulfide prices declined marginally during the first month of the quarter i.e., April, and kept on tracing an uptrend for the rest of the quarter. It was observed that the US market, which has been struggling with high inflation and lower-than-expected recovery in economic activities kept affecting the pricing dynamics of several commodities including Polyphenylene Sulfide. Further, during the mid of the quarter, consumption of Polyphenylene Sulfide in the construction sector gradually increased as indicated by the Production price index (FRED) of the Industry of Cement and Concrete Product Manufacturing in the US which rose from 233.3 (May) to 234.1 (June) experienced stronger trading activity than the previous month. The increase in downstream demand elevated the product price in the US market.
Polyphenylene Sulfide prices followed a downward trajectory throughout the quarter in the Asian market. In May 2023, the Indian market witnessed a significant decline in the price of Polyphenylene Sulfide (PPS) GF-40% CFR JNPT, which decreased by 1.1%. This drop in price was attributed to ample product availability and moderate to low demand from domestic downstream buyers. Cheaper imports from major key Asian countries also influenced the pricing trajectory. The Index of Industrial Production (Manufacturing) fell to 138.1 in April 2023 from 147.1 in March 2023, indicating a significant decline in the country's manufacturing activities. The market situation was described as bullish with a moderate to high supply and moderate to low demand. Traders were uncertain about the continuity of the uptrend in prices. In April 2023, the PPS price rose marginally by 0.9%. The demand for the product kept increasing, leading to a price rise, but a short-term shortage in spot availability was the key factor. Prices had started to decline in the regional markets by the start of the July month, which eased down the prices in the second half of the quarter.
As per the recent assessment, Polyphenylene Sulfide prices fell during Q2 2023 on the back of low demand from the domestic market amidst ample stocks in the region. The European key players have been battling with high inflationary pressure and low consumer demand. Therefore, on the back of high inflation and prolonged economic dullness, demand for multiple commodities including Polyphenylene Sulfide reduced during this timeframe affecting the pricing dynamics of the product. Furthermore, internal issues of the nation have also been bothering market sentiments, where the violence that erupted in France also affected regional trade activities. Furthermore, as per key economists of the world, Germany eventually went into recession during the mid of the quarter, and the UK has been on the edge. Consequently, overall market sentiments were low throughout the quarter, which reduced the demand of Polyphenylene Sulfide from the downstream industries. Additionally, regional freight charges also remained high throughout this timeframe, but it didn’t affect the prices of Polyphenylene Sulfide in the meantime.
In North America, demand for Polyphenylene Sulfide remained moderate to low throughout the first quarter of 2023. The major driving factor behind this demand was slow economic activity despite uninterrupted production in the country. According to data, the North American automotive sector partially improved by the end of the quarter but remained lower than expected due to prolonged inflationary pressure. The frequent price revisions by the FED on domestic interest rates remained a major concern for the country's economy, as it was resisting actual growth and pressuring the demand for the product in the country.
The Indian market for Polyphenylene Sulfide (PPS) witnessed a slight price increase in March 2023 due to a surge in seasonal demand from downstream industries. The market is currently bullish, with moderate to high demand and moderate supply. The absence of a potential recession threat and improved performance of downstream industries contributed to the current price trajectory. In February 2023, the domestic market for PPS also experienced a slight price increase due to stable demand, while major exporters faced weak demand in their local markets. Overall, Indian traders maintained their prices as demand in India remained comparatively better than in other major economies.
European economy performed expectedly low due to the repercussion of the Russia-Ukraine war, which has been putting pressure on regional economic activities. As per the data, demand for PPS from the domestic Automotive sector remained low, while other sectors like construction and textiles also performed seasonally low. Despite some disturbances in the supply chain due to snow, supplies remained stable to firm, and the overall demand-supply gap was narrow enough to support the downward price trend. The threat of recession was decreased, generating optimism for future demand.