Hamburg, Germany: The German Ethylene Vinyl Acetate (EVA) market experienced a further decline in prices in March 2024 due to continued weak consumer demand. Increased competition from Chinese-produced solar panels has intensified in recent months, forcing European and US firms to lower their prices to stay competitive. Downstream industries like footwear, packaging, and photovoltaic panel manufacturing have seen a decrease in EVA demand this month. This is because consumer markets reduced their procurement due to sufficient material availability.

However, production costs for Ethylene Vinyl Acetate continue to rise. The prices of upstream Vinyl Acetate Monomer (VAM) and Ethylene have each increased by more than 10%. OPEC+ member countries' decision to extend voluntary output reductions by 2.2 million barrels per day to support the oil market further exacerbated this issue. This aims for a balanced distribution of production cuts among members. Russia's earlier announcement aligning with this coordinated effort to reduce oil output and exports also contributed to the rise. Consequently, EVA manufacturers face shrinking profit margins in this challenging market environment.

Despite the continued decline in EVA demand, there are signs of slight economic improvement towards the end of Q1 2024. Growth in the automotive and construction sectors raises hopes for better operating conditions and improved consumer demand for domestic EVA manufacturers. While Germany's Manufacturing PMI for March 2024 saw a slight upward revision compared to February, it still indicates significant deterioration in manufacturing conditions.

Positive signs include diminishing disruptions in Red Sea shipping and suppliers operating below full capacity. Additionally, average factory gate charges fell due to strong competition for new contracts within Europe.

Consumer hesitation towards new purchases has led to a continued decline in EVA demand from downstream industries. Purchases are primarily need-based and in low volumes. However, domestic inventories are currently sufficient to meet demand both domestically and in other European markets. As of March 2024, the evaluated cost for Ethylene Vinyl Acetate 28% FOB Hamburg stood at USD 1870 per metric ton.

Germany recently abandoned plans to subsidize its domestic solar industry through consumer incentives for European-made panels. This proposal aimed to boost demand for European solar components. In response, the European solar panel manufacturing industry has urged the EU to implement emergency measures to protect local firms from the pressure of Chinese imports, which has impacted the EVA market. The ChemAnalyst database predicts an upward trend for EVA prices in the coming weeks, based on hopes of improved demand and a healthier economy.