For the Quarter Ending June 2023
In the second quarter of 2023, the North American market experienced a mixed market sentiments with Isoprene Rubber price dynamics. Isoprene rubber prices trended downward in April and May but rose significantly in the rest of the quarter. Prices of isoprene rubber continued to fall in the first two months as the US auto industry faced difficulties due to rising interest rates and deteriorating economic conditions. In addition, the continued decline in raw material isoprene prices also contributed to the slowdown in market development. However, Isoprene Rubber prices rose significantly in the last month of the quarter due to overwhelming market developments in the automotive sector. Vehicle sales in the US market rose by more than 20% in June, while sales in Western Europe rose by about 19.6%, boosting demand for Isoprene rubber significantly. As a result, the demand for Isoprene Rubber increased. The US manufacturing Purchasing Managers Index (PMI) fell to 46.3 in June from 48.4 in May. Further declines in PMI were due to lower new orders for certain products, lower input costs and lower domestic industrial activity. This also contributed to price increases for some commodities.
The second quarter of 2023 saw a rollercoaster of dynamics in the Asia-Pacific Isoprene Rubber market. Isoprene rubber prices plunged in April but rebounded in the last two months of the quarter. April's price decline was due to a combination of factors, most notably overstock and increased market competitiveness. Increased production and supply of Isoprene Rubber caused excess inventories to pile up, creating an oversupply in the market. As a result, suppliers and manufacturers were 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 Isoprene Rubber prices in Asia reflected the challenges faced by the industry in balancing supply and demand and the need for market participants to adapt to changing market conditions. However, the price increases in May and June amid strong demand from downstream industries. The price of Isoprene, the main raw material, has stabilized or fallen, keeping input costs low, while the resurgence of downstream consumption has increased the market value of Isoprene Rubber. Strong development of the automotive sector in other Asian countries has contributed to a significant increase in demand. Declining industrial activity also contributed to the price increase.
European countries witnessed consistent incline in the Isoprene Rubber pricing trend during the second quarter of the year. Throughout Q2 of 2023, European Isoprene Rubber prices experienced sustained growth as new auto purchases continuously grew. The German auto industry rebounded strongly in May, with sales up 19.2% year-on-year. With the increase in German automotive industry sales and industrial production, the consumption of Isoprene Rubber improved, and its market value increased significantly. According to the Federal Transport Administration (KBA), the number of new passenger car registrations increased by 24.8% year-on-year. As the German automotive industry performed well in the market due to pent-up demand, Isoprene Rubber consumption increased, which ultimately led to increased demand. Moreover, the Manufacturing Purchasing Manager’s Index (PMI) of Germany dropped to 40.6 in June from 43.2 in May, which indicated contraction in industrial activity of the region. As the production rate of various commodities contracted during the quarter as indicated by the falling PMI of the region, the prices of various products surged.
For the Quarter Ending March 2023
The Isoprene Rubber market showed mixed sentiments in the first quarter of 2023, which was aided by changing dynamics of supply and demand. Prices for Isoprene Rubber rose in February after hardly moving upward in January, only to fall back as the quarter's end approaches. As soon as the semiconductor supply started to improve, the automotive industry started to rebound, but it was severely harmed by the economic upheaval brought on by the failure of two big US banks. Less Isoprene Rubber was consumed by the automotive industry because of the recession's harsh effects, which eventually led to a drop in price. Thus, in March, it was estimated that the price of Isoprene Rubber MV (60-80) in the USA was USD 4174/MT FOB Texas.
During the first quarter of 2023, Isoprene Rubber prices continually increased in the Asia-Pacific region, supported by rising downstream demand. The automobile sector displayed a market spike as soon as the first quarter of the year got underway, which increased purchases of Isoprene Rubbers. The automobile industry's growth was first gradual as it worked to recover from its losses from the previous year, but a rise was seen in February as the sector's industrial output and sales dramatically increased. However, due to the unstable global economy, as the quarter ended, the growth momentum of the automotive industry slowed down once more. Consequently, Isoprene Rubber MV (60-80) was assembled at the cost of USD 3838/MT FOB Tokyo.
Prices for Isoprene Rubber decreased in the European market throughout the first quarter of 2023, supported by a drop in downstream demand. Although the European market for the downstream automotive and tire sectors displayed signals of recovery on various occasions throughout the quarter, the demand for Isoprene Rubber did not significantly increase. Additionally, there were a lot of Isoprene Rubber stockpiles, and the region's demand for the product was lesser than the supply rate, which caused the price to decline. The supply rate also increased due to the absence of port congestion and supply chain bottlenecks, which helped to sustain the decline in the price of Isoprene Rubber. Therefore, during March, the evaluated price for Isoprene Rubber in Germany was USD 1506/MT FD Hamburg.
Amid sluggish downstream demand and lowering manufacturing costs, Isoprene Rubber's market value constantly decreased in the fourth quarter of 2022 in the North American market. As the downstream automotive and tire industries were showcasing underwhelming performance in terms of sales and industrial output during the quarter, the demand for Isoprene Rubber from these industries fell. Additionally, the cost of producing Isoprene Rubber kept declining as crude oil and natural gas prices decreased, which led to a drop in the material's market value. Thus, the estimated price in the USA for Isoprene Rubber MV (60-80) in December was USD 3563/MT FOB Texas, which was 6.8% less than the price in September.
Like the North American market, the value of Isoprene Rubber in the Asia-Pacific region was steadily declining in the fourth quarter of 2022 due to weak downstream demand and falling manufacturing costs. The demand for isoprene rubber decreased as the downstream automotive and tire industries displayed lackluster performance in terms of sales and industrial output during the quarter. Additionally, as the price of crude oil and natural gas fell, the cost of making isoprene rubber continued to decrease, which resulted in a reduction in the material's market value. Isoprene Rubber MV (60-80) was therefore assessed to cost USD 2644/MT CFR Shanghai in China during December, which was 5.5% less than the price in September.
As the European market was experiencing weak downstream demand and a reduction in manufacturing costs for Isoprene Rubber, its prices were steadily declining in the fourth quarter of 2022. As the downstream automotive and tire industries performed poorly in terms of sales and industrial output during the quarter, the demand for Isoprene Rubber declined. In addition, as the cost of crude oil and natural gas dropped, so did the price of producing isoprene rubber, which decreased the commodities market value altogether. As a result, the estimated cost of Isoprene Rubber MV (60-80) was USD 1921/MT FD Hamburg in Germany during December, which was 8.3% less than the cost in September.