Butyl Rubber Market Faces Volatility: February 2024 Price Analysis

Texas, US: During February 2024, the prices of Butyl Rubber MV 32-51 showcased fluctuations in their trend in the global market. In the US market, the prices of Butyl Rubber witnessed an increase in their trend due to increased purchases from the downstream Automotive and Tire sectors, however, other than in the US, Butyl Rubber prices of the commodity fell in Europe, Asia-Pacific, and the Middle East as the demand from the downstream Automotive and Tire sectors was sluggish.

In the US Butyl Rubber market, the prices experienced an incline of 5.91% and reached USD 2150/MT (FOB-Texas) at the end of February 2024. Due to the robust demand from the downstream Automotive and Tire sectors, the rate of consumption of the existing inventories was increased, therefore, the production of Butyl Rubber was increased to cope with the rising demand from the domestic as well as the overseas markets. The electric vehicle (EV) market has, however, fallen short of expectations, revealing a disconcerting disparity between what was anticipated and the actual outcomes. Presently, the majority of electric vehicles available in the American market are positioned at the higher end of the price spectrum. This not only makes them unaffordable for the average consumer but also restricts options when it comes to different body styles.

The Manufacturing PMI of the US was increased in February 2024 as compared to January 2024. The most recent data points to a rapid expansion in the country's manufacturing sector, marking the speediest growth since July 2022. Output has experienced its most significant increase since May 2022, and the overall surge in new orders is the most robust in 21 months. Furthermore, new export orders, which had seen a decline for three consecutive months, have now expanded, reaching their highest rate since May 2022.

However, in the Russian Butyl Rubber market, the price followed a downward trend which resulted in a bearish market situation. In February 2024, the demand for passenger cars surged significantly, surpassing 100,000 units and registering an 85% year-on-year increase. Market experts attribute this spike to the widespread availability of discounts and promotions, coupled with an expanded selection of models in the Russian Federation. Analysts suggest that customers rushed to make purchases in anticipation of a forthcoming increase in the cost of importing cars from countries within the Eurasian Economic Union (EAEU). In terms of the upstream market, the prices of Crude Oil witnessed an increase in February 2024 which resulted in an increased energy cost for the production of Butyl Rubber and contributed to the increase in the production cost. Despite all the above-mentioned factors, Butyl Rubber prices were tepid due to the ample inventory levels already stocked up in the storage units.

Similarly, in Singapore, Butyl Rubber followed a bearish price trend due to the lackluster demand from the downstream Automotive and Tire sectors and the existing inventories were sufficient to fulfill the demand. Therefore, the production rate was reduced to avoid oversupplies and so that the existing ones could be utilized primarily. The Manufacturing PMI of Singapore rose in February 2024 in comparison to January 2024. The most recent data also indicates the swiftest expansion in private sectors since October 2022, attributed to improved demand conditions. Employment witnessed a record increase, and backlogs of work grew substantially. Purchasing activity saw a positive shift for the first time in eight months, while vendor performance showed signs of deterioration.

At the same time, the Saudi Arabian market also experienced sluggish demand for Butyl Rubber from the downstream Automotive and Tire sectors along with ample inventories. Therefore, the prices of Butyl Rubber in the Saudi Arabian market declined as well. Confronted with this challenging Butyl Rubber market scenario, traders responded by lowering their Ex-quotations and presenting offers to entice buyers and stimulate procurement activities. Despite these efforts, buyers exhibited hesitation in their purchasing activities due to the potential losses.

As per ChemAnalyst, it is anticipated that the prices of Butyl Rubber might witness a decline in the US trend due to sufficient inventory levels, however, other than the US, the prices of Butyl Rubber are anticipated to increase due to the heightened demand from the downstream Automotive and Tire sectors with the increased rate of consumption of the existing inventories and, therefore, low inventory levels.