Despite a Rebound in Automotive Industry, European Elastomers Market is Down. Why?

Hamburg, Germany: Recently, the CEO of LANXESS (a giant German-based specialty chemical producer) warned the European market about the further weakening of demand sentiments in the domestic market. He highlighted that almost every sector is hugely impacted by the country's poor demand and continuing destocking. In order to emphasize the adversity of the situation, he added that the volume declines are steeper than during the pandemic crisis and even steeper than it was during the collapse of Lehman Brothers 2. He added that the construction and electronic industries are hugely impacted during the current times due to softened demand sentiments, volume declines, and ongoing destocking.

The construction and electronic sectors are two of the major downstream sectors for Elastomers; hence, the consumption of Elastomers has been weakening for the last several weeks. Though the downstream automotive industry has been showcasing overwhelming market performance with an increase of 18% in new car registrations in May, the increment in automobile sales and even the surge in demand for Electric Vehicles are not seeming enough to carry the whole Elastomers market on its shoulders. Hence, the price of almost every synthetic rubber, such as EPDM Rubber, Polybutadiene Rubber, Halo Butyl rubber, etc., have been plunging from or before the second half of May.

The upstream side of the Elastomers industry is even more muddled than the downstream. Ethylene and Butadiene are the two most used feedstock in the preparation of different synthetic rubber. The market sentiments of both Ethylene and Butadiene have been slumping consistently for the last several weeks in the European market.

The market sentiments of Butadiene have been underwhelming in Europe due to poor buying interest in the domestic market and falling export activity. There is only a soft demand for Butadiene in the market as the buyers are operating at a low level amidst lesser demand for the end-use product. Furthermore, export activities have slowed down as the suppliers from Asia are procuring fewer products amid the abundance of inventories.

Moreover, amid poor demand and low production rate, the Ethylene market has been showcasing limited market momentum. The demand for Ethylene has been declining for several weeks, and in response to that, manufacturers have cut down their production. However, despite the production cuts, there are huge stockpiles of Ethylene in the European market.

All the above-mentioned data indicate that the European Elastomers market has been in complete chaos lately. Except for the automotive industry, nothing is going in favor of a strong market outlook for the Elastomers market. As per ChemAnalyst's anticipations, the European Elastomers market will likely showcase a further plunge in value in the upcoming weeks.