Contrasting Isoprene Rubber Price Trends in the USA and Japanese Markets

Texas, USA: During the week ending on August 2nd, the Isoprene Rubber MV 60-80 market exhibited a mixed trend. In France and Japan, the market experienced an upward trajectory, driven by robust demand from the automotive and industrial sectors. In contrast, the US market experienced a downward trend, largely due to decreased automotive sales coupled with ample inventory levels of Isoprene Rubber MV 60-80. This surplus in Isoprene Rubber MV 60-80 supply, alongside weakened demand, led to a decline in prices and a softer market outlook in the US.

In the US market, the prices of Isoprene Rubber MV 60-80 declined by 1.36%, reaching USD 3600/MT (FOB-Texas) during the week ending on August 2nd. This decline in the prices of Isoprene Rubber MV 60-80 can be attributed to a 2.8% drop in US auto sales in July. It was anticipated that July's sales might compensate for delays caused by the June 2024 cyberattack, but automotive sales fell as inventories rose to 2.9 million units, a 49% increase from the previous year. As of August 2, new vehicle sales for July were 1,277,232 units, down 2.8% from July 2023. Although many dealers recovered from the cyberattack on CDK Global, stable feedstock Butadiene prices kept production costs unchanged, leading to higher inventories of Isoprene Rubber MV 60-80 and subsequent price declines. Additionally, inflation eased to a four-month low, and business optimism improved with hopes of a temporary demand soft patch, bolstered by new business prospects following the Presidential Election.

Additionally, for the past year, the U.S. Federal Reserve has kept benchmark borrowing costs at a 23-year high of 5.25%-5.50%. This prolonged tight monetary policy has raised concerns among analysts that it may be pushing the economy toward a recession. Adding to these concerns, the Sahm Rule Recession Indicator recently crossed the 0.50 threshold, a level that has historically indicated the onset of a recession in the U.S. economy. This indicator, which compares the three-month average of the unemployment rate to its low over the previous 12 months, suggests that economic conditions may be deteriorating, heightening fears of an impending recession amidst already challenging market conditions.

However, in the Japanese region, Isoprene Rubber MV 60-80 prices increased by 1.51% during the week ending on August 2nd, driven by heightened demand for Isoprene Rubber MV 60-80 from the downstream automotive and tire sectors. In July 2024, Japanese new vehicle sales rose by 6.9% year-on-year to 405,174 units, according to the Japan Automotive Dealers Association and Japan Light Motor Vehicle and Motorcycle Association. Sales of vehicles with engine displacements over 660cc surged by 3.9% and reached 263,194 units, however, vehicles with displacements under 660cc rose by 12.9% and reached 141,980 units. Despite the strong performance in July, total sales from January to July 2024 declined by 10.5% to 2,532,664 units. This has supported the prices of Isoprene Rubber MV 60-80.

According to ChemAnalyst, the Isoprene Rubber MV 60-80 market in Japan is anticipated to rise due to expected increased demand from the downstream automotive and tire industries. In contrast, the US market is projected to maintain bearish sentiments following the Federal Reserve's decision at its July Federal Open Market Committee (FOMC) meeting to keep its benchmark interest rate unchanged at 5.25%-5.5%. This sustained high interest rate could dampen economic activity, potentially leading to a further decline in demand for Isoprene Rubber MV 60-80 from the US automotive and tire sectors, thereby exerting downward pressure on the market.