European POM Market Struggles Amidst Weak Demand and Economic Woes

The European Polyoxymethylene (POM) market is currently facing a confluence of challenges stemming from weak demand and significant exposure to economically strained sectors such as automotive, electrical, electronics, construction, and industrial applications. Despite a sufficient supply of POM, the market is hampered by low consumption rates, leading to a decline in prices as suppliers attempt to navigate poor margins in an unfavorable economic environment.

Prolonged lead times and high freight costs have rendered POM prices from Asia uncompetitive. As a result, these prices now exceed European prices, causing a lack of offers from Asian suppliers.

The automotive industry, a major consumer of POM, has seen a marked decline in production and demand. In June, Germany's domestic car production reached a volume of 350,200 units, representing a 9% decrease compared to the same month last year. Since January, a total of 2.1 million cars have been manufactured in Germany. The demand for electric vehicles (EVs) remains particularly weak, attributed to the abrupt cessation of federal funding and the overall weak economic development in the country. This downturn in the automotive sector has significantly affected the POM market, as the material is extensively used in fuel system components, interior and exterior parts, and transmission and powertrain components.

The electrical and electronics sectors, which also heavily rely on POM for connectors, switches, consumer electronics, and various housings, are similarly experiencing reduced activity. The slowdown in these industries has compounded the challenges faced by POM suppliers, who are grappling with declining demand and intensified competition.

The construction industry in Germany is another critical sector where POM finds substantial application, particularly in fasteners, connectors, and sliding mechanisms. However, the industry has reported a deterioration in business conditions. Construction companies have indicated that their business situation in June was worse than in May, reflecting the broader economic struggles.

Germany's manufacturing sector, which constitutes approximately one-fifth of Europe's largest economy, encountered a significant setback in June as both output and new orders declined at an accelerated rate. This downturn is a crucial indicator of the ongoing challenges faced by the POM market. With manufacturing output diminishing, the consumption of POM in downstream derivative industries has remained weak, continuing this trend into the first week of July.

In the current environment of low demand, the reduction in raw material costs has compelled suppliers to lower their prices. The cost-cutting measures by suppliers are a response to the necessity of remaining competitive in a market where demand is sluggish, and economic conditions show no immediate signs of improvement.

The deteriorating business climate in Germany has further exacerbated the situation. Sentiment regarding future expectations has grown increasingly skeptical, with businesses across various sectors bracing for continued economic difficulties. This pervasive uncertainty is reflected in the cautious approach of industries dependent on POM, further suppressing demand.

The POM market in Europe is expected to see stable prices in the coming months despite weak demand. Suppliers are maintaining current pricing levels due to reduced raw material costs, balancing market conditions and aiming to improve margins amidst ongoing economic challenges in key sectors.