The Epichlorohydrin Rubber market in Japan continued its significant upsurge during July 2024 which was attributed to a logistical disruption emerging from floods and rainy season. Despite a decline in feedstock Epichlorohydrin prices which typically translates into reduced production costs by exerting downward pressure, the prevailing market dynamics of Epichlorohydrin Rubber in July exhibited an opposing trend. The onset of the rainy season and subsequent floods in northern Japan wreaked havoc on the supply chain, creating a bullish market sentiment for the Epichlorohydrin Rubber.

Key logistical bottlenecks, including acute container shortages and comparative high freight rates, empowered sellers to command premium prices. Since July 25, Yamagata, Shiga, and Akita prefectures have been experiencing heavy rains, which have resulted in floods and landslides, as well as injuries and damage. Not only in Japan, but the transportation landscape was further exacerbated by Typhoon Gaemi, which ravaged Taiwan, the Philippines, and parts of southeast China, causing widespread damage and disruptions. As a result, the cost of shipping Epichlorohydrin Rubber from Japan to China surged, significantly eroding profit margins for exporters to settle at USD 5587/MT Epichlorohydrin Rubber MV- 70 FOB Tokyo, Japan during July 2024. The combined impact of these logistical hurdles constrained the supply of Epichlorohydrin Rubber from the Far East Asian region due to port congestion and operational challenges. Secondly, it forced buyers to rely heavily on domestic supplies, leading to a supply-demand imbalance that propelled prices upward.

Furthermore, the automotive sector, a major consumer of Epichlorohydrin Rubber, witnessed a surge in demand during July. This increased offtake from downstream industries provided additional momentum to the bullish trend for Epichlorohydrin Rubber. The prevailing market conditions compelled buyers to secure limited supplies at elevated prices to meet their production requirements. Furthermore, the uptick in orders from the tire and automotive downstream businesses contributed to the continued high level of business confidence. The expectation of consistent demand expansion prompted market participants to take a more optimistic approach. According to the Japan Automotive Dealers Association and the Japan Light Motor Vehicle and Motorcycle Association, the automotive industry had a notable increase in sales during July. The rise in car sales was a direct cause of the increased demand for Epichlorohydrin Rubber during this timeframe.

As per ChemAnalyst, the Epichlorohydrin Rubber market in August 2024 is expected to incline further due to an increase in sales from the downstream automotive sector. Moreover, an increase in market activities may lead to an increase in prices amidst an escalation in freight charges.