For the Quarter Ending September 2023
North America
In the third quarter of 2023, the North American Butyl Rubber market experienced a series of fluctuations. It commenced with a significant price decline in July, stabilizing in August, and culminating in a notable price surge in September. July saw a substantial drop in Butyl Rubber prices, primarily due to an oversupply of inventories in the industry. This decline was further influenced by a stable manufacturing sector and decreasing feedstock (Isobutylene and Isoprene) prices. Furthermore, in August, the Isobutylene prices decreased further, and production costs for Butyl Rubber continued to fall, offsetting the strong demand from both domestic and international markets, thereby maintaining price stability throughout August. In September, Butyl Rubber prices witnessed a substantial increase. This surge was driven by heightened demand from downstream industries within the domestic market, particularly the thriving US automotive sector. Despite a strike by the United Auto Workers (UAW) against Detroit's major automakers, US vehicle sales flourished, with 1.33 million new vehicles sold in September. This robust performance in the automotive sector, combined with positive indicators of recovery in the US construction industry during the same month, led to a significant uptick in Butyl Rubber demand. Additionally, a surge in crude oil prices, attributable to OPEC+ production cuts, contributed to higher production costs for Butyl Rubber, supporting the subsequent increase in its market value.
APAC
Butyl Rubber prices in the Asian market diverged from the North American trend in the third quarter of the year and showcased a significant rise in July, followed by a stable market trend in August and a plunge in September. The surge in July was propelled by a sharp increase in demand from the automotive industry, which had been excelling on a global scale. The Association of Southeast Asian Nations (ASEAN) witnessed a 5.8% rise in light-vehicle sales compared to the previous year, with a year-to-date growth of 1.5%. Concurrently, light-vehicle production in the ASEAN region experienced a 3% year-over-year increase in July, and the trend persisted into August. China and India, which import Butyl Rubber from Singapore, also reported substantial year-on-year growth in their automotive sectors in August. However, Isobutylene prices in Singapore dipped in July but attempted to recover in August. However, the production cost of Butyl Rubber continued to decrease due to declining feedstock Isobutylene prices, countering the strong demand and maintaining a stable market trend in August. In September, Butyl Rubber prices plummeted in Singapore due to reduced demand in the Asian market. South Korea's top automakers saw a 6% year-on-year decline in domestic sales, partly due to interest rate hikes. Consumer sentiment in China was subdued due to economic slowdown, affecting the construction industry and, consequently, Butyl Rubber demand.
Europe
The European market witnessed surge in Butyl Rubber prices in the first month of quarter 3, however, as the quarter proceeded, the market started showcasing consistent plunge. In July, the European market witnessed a notable upswing in the price of Butyl Rubber, driven by an impressive surge in demand originating from the downstream automotive industry. This sector, which had showcased remarkable performance on the global stage, played a pivotal role in bolstering the demand for Butyl Rubber, a crucial component in various automotive applications. However, despite the strong recovery in year-on-year sales in the downstream automotive industry, the pricing landscape for Butyl Rubber witnessed a noteworthy decline within the market throughout the month of August as the construction industry across the Eurozone experienced its most pronounced downturn of the year. This downturn primarily stemmed from a sharp decline in demand within Germany, coupled with escalating costs of raw materials, even as the requirement for construction inputs diminished. Furthermore, the price of Butyl Rubber slumped further in the European market during September, backed by weak inquiries from the downstream automotive and construction sectors.
MEA
In the third quarter of 2023, the price of Butyl Rubber in the Saudi Arabian market experienced consistent surges driven by various factors. In July, a significant increase was observed, primarily due to a surge in demand from the global automotive industry, which had been performing exceptionally well. August saw another substantial rise in Butyl Rubber prices, primarily attributed to a rise in international inquiries. Belgium, China, and Singapore emerged as major importers from Saudi Arabia, and all three countries experienced significant growth in their automotive sectors during the month. The surge in downstream automotive sectors in these importing countries led to increased demand for Butyl Rubber from Saudi Arabia, consequently driving up its market value. In September, the cost of Butyl Rubber further increased due to rising crude oil prices. Crude oil prices reached their highest point, driven by the anticipation of reduced supply, despite concerns about a weaker economy and increased US crude inventories. This upward momentum in crude oil prices was influenced by Saudi Arabia and Russia's decision to extend voluntary production cuts until December to support higher oil prices. As a result, the rising crude oil prices throughout September led to increased production costs for Butyl Rubber, ultimately contributing to its higher market value.
For the Quarter Ending June 2023
North America
Butyl Rubber prices showed consistent growth in the US market in the second quarter of 2023, supported by strong market performance in the automotive industry. Concerns remained high over whether rising interest rates would significantly reduce consumer spending, but recent indicators suggested that consumers were comfortable spending large amounts of money. The automotive industries faced acute shortages in the first half of 2023 amid concerns about semiconductors availability, which impeded mass assembly until the second half of the year when the situation stabilized. As a result, a combination of improved supply and rising consumer appetite drove strong growth going into the next fiscal quarter. External factors such as the collapse of two major financial institutions at the end of Q1 had a negative impact on the economy in the second quarter, but the temporary suspension of a national debt ceiling helped avoid a recession. Inflation levels measured by the consumer price index (CPI) in the USA increased by only 0.1% in May after a significant increase of 0.4% in April.
APAC
The second quarter of 2023 saw a turbulent market trends for Butyl Rubber in the Asia-Pacific region. Butyl Rubber prices surged in April, followed by a consistent plunge in May and June. The decline in prices in May and June was due to a combination of factors, most notably overstock and increased market competitiveness. Due to the increase in the production and supply of Butyl Rubbers, excess inventories accumulated, resulting in an oversupply in the market. As a result, suppliers and manufacturers are forced to reduce inventories and lower prices to remain competitive. In addition, the presence of competitors vying for market share increased competition, necessitating price adjustments to attract customers. This decline in Butyl Rubber prices in Asia reflects the challenges facing the industry in balancing supply and demand and the need for market participants to adapt to changing market conditions. However, April's price increase was due to strong demand from downstream industries. While the price of the raw materials has mostly been falling, keeping input costs low, the resurgence of downstream consumption has increased the market value of Butyl Rubbers. Strong development of the automotive sector in other Asian countries contributed to a significant increase in demand. Declining industrial activity also contributed to the price increase.
Europe
Butyl Rubber prices continued to fluctuate in Europe in Q2 2023, supported by an unstable supply and demand dynamics. Prices fell in April, rose in May, and fell again in June. Butyl Rubber prices fell in the Russian market despite improved market sentiment in the downstream automotive industry in April. Poor development of the replacement tire industry led to reduced purchases of material, which ultimately led to lower prices for Butyl Rubber. A strong increase in demand from the automotive and pharmaceutical industries led to a significant increase in the price of Butyl Rubber in Russia. Strong growth in the Russian automotive industry, combined with increased demand for high-performance tires and sealants, has led to increased demand for Butyl Rubber. In addition, stringent requirements for maintaining product integrity and preventing contamination in the pharmaceutical sector have further contributed to the increased demand for Butyl Rubber in Russia. As a result, the increased demand for these industries led to a significant increase in the price of Butyl Rubber in the Russian market in May. However, weakening demand sentiment led to an unexpected drop in Butyl Rubber prices in the Russian market in June. Poor performance of the European construction industry on the face of ongoing destocking and weak demand led to lower consumption of Butyl Rubber in the global market, leading to lower market demand. In addition, the Purchasing Managers Index (PMI) of the Russian manufacturing sector again remained in the growth zone, confirming an improvement in the production rate of some commodities, consistent with falling market prices of commodities such as Butyl Rubber.
MEA
In the second quarter of 2023, Butyl Rubber prices continued to fluctuate in the MEA region, supported by an unstable supply and demand dynamics. Prices fell in April, rose in May, and fell again in June. Market sentiment in the downstream automotive industry improved in April, but Butyl Rubber prices fell in the Saudi market. Poor performance in the replacement tire industry led to reduced material procurement, leading to lower prices for Butyl Rubber. Butyl Rubber prices rose significantly in May in the Saudi Arabian market, mainly due to high demand from Singapore and Belgium. These countries have shown growing interest and strong demand for Butyl Rubber, leading to increased exports from Saudi Arabia. Singapore is known for its resilient industrial and manufacturing sectors, particularly automotive and construction, and relies heavily on Butyl Rubber for applications such as tire manufacturing, sealants, and adhesives. Belgium, with its thriving pharmaceutical and chemical industries, also needed Butyl Rubber to produce lids, stoppers and seals for pharmaceutical packaging. Increased demand from Singapore and Belgium created a supply-demand imbalance in the Saudi market, driving up the price of Butyl Rubber as manufacturers and exporters sought to capitalize on the increased demand. As a result, increased demand from these industries is creating significant upward pressure on Butyl Rubber prices in the MEA market. Saudi Arabia's Butyl Rubber market saw an unexpected price drop in June due to a lack of market sentiment. Market trends for Butyl Rubber were depressed due to a prolonged lack of demand and slow market development in the Saudi construction industry. Moreover, Saudi Arabia's manufacturing purchasing index (PMI) was 59.6 in June, up from 58.5 in May, suggesting increased production of various products, including Butyl Rubber, has led to falling values.
In the first quarter of 2023, the Butyl Rubber market revealed conflicting sentiments due to fluctuating supply and demand dynamics. When compared to January, the price of Butyl Rubber rose in February before dropping again as the quarter's end approached. The automotive industry started to rebound as soon as the semiconductor supply started to increase, but it was soon adversely affected by the financial instability brought on by the fall of two big US banks. Less Butyl Rubber was being utilized in the industry because the downturn in the economy had a particularly negative influence on the automotive industry, which eventually led to a fall in price. Thus, in the USA, the assessed price of Butyl Rubber MV 32-51 was USD 2485/MT FOB Texas.
During the first quarter of 2023, the Asia-Pacific region's prices for Butyl Rubber continuously increased thanks to growing downstream demand. The automotive sector had a market upswing that led to an increase in Butyl Rubber purchases as soon as the first quarter of the year got underway. A substantial rise in the industrial output and sales of the automotive industry was the reason for the observed surge. At first, Butyl Rubber's rebound was swift as it tried to make up for its losses from the previous year. However, the growth of Butyl Rubber slowed down once more in February and March. As a result, in March, the price of Butyl Rubber MV 32-51 in China reached USD 2295/MT EX-Qingdao.
Throughout the first quarter of 2023, Butyl Rubber prices fell in the European market, which was aided by a decline in downstream demand. The demand for Butyl Rubber did not significantly rise even though the European market for the downstream automotive and tire sectors showed signs of improvement on numerous occasions throughout the quarter. In addition, there were numerous stockpiles of Butyl Rubber, and the price fell since there was less demand for the product in the area than there was supply. The lack of port congestion and supply chain bottlenecks also enhanced the supply rate, which supported the drop in the price of Butyl Rubber. As a result, in March, Russia's assessed price for Butyl Rubber MV 32-51 was USD 1830/MT FOB Novorossiysk.
