Increased Upstream Cost Support Leads to Buoyancy in Nitrile Butadiene Rubber Prices in Mid-June 2024

Hamburg (Germany): The prices of Nitrile Butadiene Rubber (NBR) have been showing an upward trend in the European and Asian markets. The rise in upstream Butadiene prices, coupled with an increase in crude oil prices, has been driving the price realization of NBR. According to market sources, crude oil prices rose last week after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) maintained their forecast for robust global oil demand growth in 2024. Expectations of higher fuel demand during the summer months also contributed to the price rise, with Brent crude futures climbing to USD 82.11 per barrel, continuing their recovery from last week's four-month low of USD 77.52. Additionally, the rise in freight charges amid the Red Sea crisis and container shortage has escalated transportation costs for NBR.

The ChemAnalyst database shows that NBR prices increased by USD 20 per ton in the week ending June 14th in the domestic market of France. Market sources report that inquiries from downstream NBR industries, particularly the automotive sector, have been moderate. Inquiries from importing European countries, such as Germany, have also remained limited, further supporting stable NBR market conditions. On the upstream front, the availability of Butadiene and Acrylonitrile has been sufficient to meet downstream demand, as tepid demand fundamentals dominate the market. Market sources noted that Total Energies' Butadiene manufacturing plant at the Gonfreville Complex underwent a maintenance shutdown in May.

Conversely, rising offers from exporting Asian nations have increased NBR prices in Southeast Asian nations. In Malaysia, during the second week of June 2024, NBR prices were observed at higher levels, driven by price increases in major exporting countries such as Japan and South Korea. Improved domestic economic conditions have gradually increased demand from the downstream automotive sector, bolstering NBR market fundamentals in Malaysia. Additionally, limited availability of finished goods has heightened supply-side pressures, as manufacturing firms in exporting nations continue to operate at reduced rates. Market sources attribute this increase to rising Butadiene prices. Higher manufacturing costs, driven by elevated crude oil prices, have positively influenced NBR price realizations.

According to ChemAnalyst pricing intelligence, NBR prices might continue to rise in the regional market. The upcoming holiday season in Europe is likely to impact the already low production levels in European nations, exerting supply-side pressure on NBR market fundamentals. Thus, the prices may increase in the short term in the European region on the back of tightened market fundamentals.