European NPG Market Takes an Ease Amidst Lacklustre Demand, USA Stabilises

Global Neopentyl Glycol (NPG) market prevailed stable to soft market sentiments during the first week of April. The prices eased marginally in the European market in wake of narrowed gap between demand and supply, however managed to maintain stability in Asian and North American market amidst modest demand from downstream paints and coatings industry.

The German NPG market witnessed bearish market situation throughout the current week, with prices experiencing a marginal decline of 1.5%. Despite a notable increase in the price of essential raw material, Crude Oil, the impact on NPG prices remained somewhat subdued. This decrease in price can largely be attributed to an oversupply of material in the market, coupled with tepid demand from downstream industries. Demand for NPG remained moderate within the construction sector, as the gradual uptick in housing demand potentially boosted sales figures for newly constructed homes, albeit without significant effect on NPG demand. Concurrently, the automotive sector in the region faced challenges, exerting downward pressure on NPG prices.

Surveys conducted indicate a decline in sales of electric vehicles (EVs) and passenger cars during this period. New registrations were particularly impacted by the ongoing market slump for battery-powered electric vehicles (BEVs), exacerbated by the government's withdrawal of incentives at the end of the previous year. Data released by KBA Germany further highlights this trend, with a nearly 29% decrease in BEV sales in March. In response to lower customer demand and improved material availability, manufacturers continued to bolster their inventories during the current week.

Conversely, the North American market remained relatively stagnant during this period, indicating a balanced equilibrium between supply and demand. Demand for NPG remained moderately strong throughout March 2024. Notably, there has been a significant resurgence in the construction and automotive sectors in the USA since February 2024, which has helped alleviate some of the demand pressures on NPG, a vital material for construction and automotive paints and coatings. In the construction sector, demand for NPG was buoyed by robust performance as the Spring buying season commenced. The National Association of Homebuilders reported a three-point increase in its monthly confidence index to 51 in March, marking the highest level since July 2023 and the fourth consecutive gain. This boost in confidence likely stimulated increased activity in the construction industry, including demand for NPG.

Furthermore, the automotive sector experienced a recall during this week, which could have temporarily impacted demand dynamics. Additionally, the supply situation of NPG in the North American market seems to be progressing at a moderate pace. Manufacturing facilities within the country are operating at this same moderate pace, neither excessively slow nor exceptionally fast. The combination of these factors contributed to stable prices of NPG within the North American market.