July Sees Neoprene Rubber Price Surge Amid Rising Butadiene Costs and demand

In July, Neoprene Rubber prices in Asia experienced a significant surge, primarily fueled by the persistent rise in Butadiene costs. Butadiene, a crucial feedstock for Chloroprene monomer production, plays a vital role in the manufacturing of Neoprene Rubber. The upward trajectory in Butadiene prices has been a key driver behind the overall increase in Neoprene Rubber costs. In addition to rising feedstock prices, positive actions and heightened activity from suppliers have substantially impacted demand dynamics. Suppliers have been actively engaging in inventory management and adjusting their strategies to meet market needs, further contributing to the upward pressure on prices.

Neoprene Rubber prices in Japan have risen this month, influenced by a 7.1% increase in Butadiene prices in July. The automotive sector demonstrated strong growth, with 405,174 units sold, reflecting an 8.45% month-on-month and 6.89% year-on-year rise. According to Denka, a leading Chloroprene Elastomer manufacturer, inventory adjustments progressed, and demand recovery aligned with projections. Denka is also assessing the impact of new regulations on Chloroprene rubber operations. From the Elastomers & Infrastructure Solutions it reported 29.2 Billion Yen marking an increment of 3.6% from a quarter ago. In the Aerospace sector, Mitsubishi Heavy Industries (MHI) reported a 15.0% year-on-year increase in order intake, driven by robust Defense & Space performance. However, the broader Japanese manufacturing sector exhibited signs of strain, with the Manufacturing PMI indicating declining business conditions at the start of Q3 2024. The interplay of rising demand and proactive supplier actions has led to a slight uptick in Neoprene Rubber prices in Japan.

In the Chinese market, Neoprene Rubber prices have increased this month, driven largely by higher prices from major Japanese manufacturers. The feedstock market saw a 6.4% rise in Butadiene prices in July, contributing to the overall cost increase. Domestic passenger vehicle sales fell to 1.72 million units in July, a 2.8% year-over-year and 2.6% month-over-month decrease, according to the China Passenger Car Association (CPCA). In the aerospace sector, HS China Aerospace & Defence reported stable lower prices, suggesting no significant demand surge. COMAC focused on the domestic market while planning international expansion, securing over 1,200 orders for the C919 from Chinese airlines and leasing companies. The construction sector sub-index fell to 51.2 in July from 52.3 in June, impacted by heat waves, rainstorms, and floods. The NBS Manufacturing PMI also declined slightly to 49.4 in July from 49.5 in June. In response to these conditions and with anticipation of future demand, market participants have kept inventory levels steady, contributing to the rise in Neoprene Rubber prices this month.

According to ChemAnalyst, Neoprene Rubber prices are anticipated to show a bullish trend in the upcoming sessions. This projection in the Neoprene Rubber price rise is largely due to the expected rise in Butadiene prices, a crucial feedstock for Neoprene production. Current market sentiment suggests that suppliers will focus on accumulating inventories, which is likely to drive up Neoprene Rubber prices.