High Feedstock Cost Accelerates the Global Polyisobutylene Prices

Since the beginning of February 2023, Polyisobutylene prices have witnessed an upward trend across the global market, backed by the high-cost pressure from the feedstock. Improved demand dynamics, stable inventories in the region, and high-interest rates by the US Feds, along with high inflation, have further obstructed the market growth of Polyisobutylene.

Polyisobutylene prices raised drastically in the Chinese market owing to increased consumption from the downstream industries. Additionally, the production cost of Polyisobutylene has increased due to high feedstock Isobutylene prices. Meanwhile, imports from neighboring South Korea and others have been steady, resulting in stable material availability in China's domestic market. On the other hand, demand from the downstream automotive industries has increased in the domestic market, thus increasing the demand pressure on Polyisobutylene availability. Additionally, the Chinese market witnessed its first month of economic expansion in February. PMI in China has increased to 51.6 as manufacturing and industrial activities bolstered after several months of below-par performance. Moreover, the China Association of Automobiles Manufacturer (CAMM) reported a vehicle production and sales volume month-on-month increase in February, compared with January. Thus, prices of Polyisobutylene CFR Qingdao were assessed at USD 1972/MT with a month-on-month increment of USD 272/MT during February 2023.

Similarly, prices of Polyisobutylene in the German market have been on the higher end, supported by the high-cost pressure from the feedstock Isobutylene price. Demand for Polyisobutylene from the downstream automotive industries has increased in the domestic as well as from overseas markets. Market participants have reported a rise in new queries from the end-user sectors. According to ifo, Business Climate Index raised from 90.1 points to 91.1 points during February, compared with the previous month. In addition, according to the market participants, sales of new cars in Germany rebounded in February, helped by strong demand for SUVs. A total of 206,210 new cars hit the road in Europe's top economy last month of 2023, up 2.8 percent from a year earlier. The February figure was still well below pre-pandemic levels, although carmakers persist in contending with enduring supply chain problems. Hence, prices of Polyisobutylene FOB Hamburg were settled at USD 2638/MT during the same time frame.

Furthermore, in the USA market, Polyisobutylene prices have risen by USD 385/MT due to increased demand from the end-user automotive and other industries. Operating rates have optimum in the domestic market in the wake of improved consumption from the domestic and overseas markets. At the same time, raw material Isobutylene prices have raised resulted in the overall high production cost of Polyisobutylene. According to the market sources, auto sales in February were better than expected, reaching a seasonally adjusted selling rate of about 15 million units. According to the sources, estimated sales were up by 8.5% last month compared with February 2022. Furthermore, Ford Motor's February sales increased by more than 20% from the subdued result a year earlier, while Hyundai-Kia's sales increased by 16.2%. Market participants reported that the automotive industry continues to steer through some supply chain and production issues, although the flow of parts and vehicle production this year is anticipated to be more consistent than in recent years.

As per the ChemAnalyst, Global Polyisobutylene prices will continue to increase in the Q2 of 2023 due to further expectations of rising demand from the end-user automotive as well as from the construction industry. Meanwhile, feedstock Isobutylene prices will rise, which may positively affect the prices of Polyisobutylene.