For the Quarter Ending September 2023
North America
Neoprene Rubber prices in the North American market exhibited a mixed pattern during the third quarter of 2023. They saw a significant increase in July and August only to decline in the following month. The price of Neoprene Rubber in the US market went up in the initial months of quarter 3 due to strong demand, driven by a substantial rise in vehicle sales in the US. The US automotive industry has consistently shown strong annual growth due to factors like improved availability, fleet shipments, and customer incentives. While the year-over-year growth continued in August, there were some faint signs of a slowdown in the monthly growth, despite having two additional selling days. Additionally, on a global scale, crude oil prices have been on the rise, raising concerns about its impact on the world economy, especially when many are already grappling with inflation. One of the reasons behind the increase in crude oil prices is the decision by the US Federal Reserve to maintain its interest rates to prevent a downturn in the US economy. This surge in crude oil prices has led to higher production costs for Neoprene Rubber, resulting in an uptick in its market value. However, for the rest of the quarter, the Neoprene Rubber market experienced a noticeable decline in prices. This decrease can be attributed to the continuous fall in the prices of the raw material, which had a downward impact on the overall production costs of Neoprene Rubber. Interestingly, despite robust market sentiments in the global automotive and tire sectors, the market dynamics favoured oversupply, resulting in a significant decrease in pricing trends.
APAC
Neoprene Rubber prices showcased mixed market momentum in the Asia-Pacific region during the 3rd quarter of 2023. The Neoprene Rubber prices surged in July only to fall back again in the month of August and become stable in September. Neoprene Rubber prices surged in the Asian market during July on the back of increased downstream demand. According to reports, domestic new vehicle sales of Japan in June increased by 19.8% compared to last year. As the Japanese automotive industry performed well, Neoprene Rubber consumption increased. The automotive industry in other Asian countries like South Korea and India also performed well in the market which supported the increase in downstream demand for Neoprene Rubber. Furthermore, the Asian new vehicle market witnessed a remarkable growth in August 2023. This positive shift can be attributed to the gradual recovery from the impact of Covid-19 lockdowns, which began easing in the latter part of the prior year. Furthermore, the improved availability of semiconductors enabled automotive manufacturers to ramp up production and reduce order backlogs. However, the Neoprene Rubber market showcased a significant plunge during August. This slump can be attributed to the continuous decline in the prices of the raw material, throughout July, followed by a slight recovery in August. These declining raw material costs continued to exert downward pressure on the production expenses of Neoprene Rubber Consequently, despite a noticeable increase in demand from downstream sectors, the prices of Neoprene Rubber dropped in the last months of the quarter. Furthermore, amidst stable demand supply dynamics in September, the prices of Neoprene Rubber remained unchanged.
Europe
The prices of Neoprene Rubber showcased fluctuating market sentiments during the third quarter of 2023. The prices of Neoprene Rubber surged in July, only to showcase a consistent decline in August and September. During July, there was a noticeable price surge for Neoprene Rubber in the European market. This increase was spurred by a remarkable surge in demand from the downstream automotive sector. Additionally, the European market experienced a 0.1% decline in inflation during July, further contributing to the heightened demand for Neoprene Rubber. However, in the subsequent months, 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. This deceleration in construction activities was perceptibly mirrored in the Purchasing Managers' Index (PMI) for the Eurozone construction sector, which exhibited a slight dip from 43.5 to 43.4 in August, signifying a conspicuous slowdown in industry activity. Consequently, this reduction in construction activity had a cascading effect, resulting in decreased demand for Neoprene Rubber in the European market and thereby impacting the overall market demand for this product.
For the Quarter Ending June 2023
North America
The Neoprene Rubber prices showcased mixed market momentum during the 2nd quarter of the year. In April, the Neoprene Rubber prices plunged drastically, only to make a recovery in May, followed by a consistent rise in June. The market sentiment of Neoprene Rubber improved in the second half of the quarter on the back of an uptick in sales in the automotive industry. Concerns remained high about whether rising interest rates would significantly reduce spending, but recent indicators suggested that consumers were comfortable enough to spend large purchases. The automotive industries faced acute shortages of semiconductors earlier this year amid concerns about availability, which impeded mass assembly until the latter part of the year when the situation stabilized. A combination of better supply and rising consumer appetite supported strong growth going into the next fiscal year. External factors, such as the collapse of two major financial institutions at the end of Q1, hurt the economy in Q2. However, a temporary suspension of the nation's debt ceiling helped avert a recession. Inflation levels measured by the consumer price index (CPI) in the USA increased by only 0.1% last month after a significant increase in April of 0.4%.
APAC
Asia-Pacific Region Neoprene Rubber prices increased steadily throughout Q2 2023. The prices rose consistently during the quarter and made the most improvements towards the end of the quarter. In April, Neoprene rubber costs increased due to strong downstream demand. During the month, the demand for tires increased, which led to an increase in the demand for Neoprene Rubber. Likewise, In May, the use of Neoprene Rubber increased significantly due to the increase in demand from the pharmaceutical and automotive sectors. The significant increase in the growth of these sectors led to a rise in the requirement for Neoprene Rubber, resulting in its increased market price. In June, Neoprene Rubber prices in Japan increased significantly due to an increase in demand from both domestic and international markets. Domestic Neoprene sales in Japan increased by 19.8% in June compared to June of the previous year. As import orders increased from Asian countries such as South Korea, India, etc., the procurement of Neoprene Rubber surged further, eventually causing an increment in its market value.
Europe
During Q2 2023, Neoprene Rubber's price decreased consistently in the European market. In April, the European market prices decreased despite the positive market sentiments of the downstream automobile industry. The decrease in prices was due to the replacement tire market's poor performance, which resulted in fewer purchases of the material. In May, the European market price decreased again. The decrease in input costs combined with decreasing energy prices led to a significant decrease in the production cost of the material, resulting in a decrease in the market value of the material. Furthermore, in May, the new order inflows decreased significantly, the most significant decrease in the last six months, and the Eurozone exports decreased significantly. All these factors contributed to the decrease in the prices of the material. In June, the European market experienced weak demand for neoprene rubber, despite the positive market momentum of the downstream automotive industry due to the surplus availability of inventories.
In the first quarter of 2023, the Neoprene Rubber market displayed conflicting sentiments, which was supported by shifting supply and demand dynamics. After showcasing a significant increase in January, prices for Neoprene Rubber surged again in February, only to decline as the quarter's end drew near. The automobile sector began to recover as soon as the supply of semiconductors began to improve, but it was badly hurt by the economic turmoil caused by the failure of two significant US banks. Because of the severe effects of the recession, less Neoprene Rubber was consumed by the automotive industry, which eventually resulted in a price decrease. Hence, the assessed price of Neoprene Rubber in the USA in March was USD 6400/MT CFR Texas.
The Asia-Pacific region's Neoprene Rubber market showcased mixed sentiments, which was very similar to its trend in North America. In Asia-Pacific, the cost of Neoprene Rubber rose in January, increased again in February, and then suddenly decreased in March. The faltering automobile industry in the Asia-Pacific area quickly started to exhibit indications of deterioration as China started to reduce its automotive inventories. Due to massive inventories and few sales, Tesla reduced the market value of automobiles, which started a pricing war in the Chinese auto sector. Imitating Tesla's move, other auto manufacturers started destocking as well. Due to the automotive industry's active destocking activities, the production of automobiles declined, which also had an impact on the demand for Neoprene Rubber. The Asian market's demand suffered owing to their dependence on the Chinese market for Neoprene Rubber consumption. Hence, the price of exported Neoprene Rubber from Japan was USD 6150/MT FOB Osaka during March.
Neoprene Rubber prices in the European market rose steadily during the first quarter of 2023, helped by rising downstream demand. As soon as the first quarter of the year began, the automotive industry showed a market surge, which increased purchases of Neoprene rubber. A surge was observed in January and February because of a sharp increase in the industry's industrial output and sales. Initially, the automobile industry's recovery was sharp as it attempted to recover from its losses from the previous year. However, the automotive industry's growing momentum slowed down again as the quarter approached its end because of the unsteady global economy. Consequently, the estimated price of Neoprene Rubber in Germany was USD 5900/MT FOB Hamburg in March.
