Marginal Increase in European POE Prices Amidst Stable Asian Market and Steady Feedstock Cost

Hamburg (Germany): In the European market, the price of Polyolefin Elastomer (POE) witnessed a marginal increase as of early June, while it remained stable in the Asian market with no major upsurge in the price of its feedstock, Ethylene. This increase in POE price is primarily attributed to rising prices observed from a major exporter in the Asian market, South Korea. Due to an imbalance in the demand-to-supply ratio, suppliers marginally increased their ex-quotation prices, resulting in an overall price increase of POE during this period.

POE prices in Japan have stabilized this week, driven primarily by stable prices from South Korea, a major exporter in the Asian market. Ethylene prices in the feedstock market saw a significant decrease of 2.9%, supported by declining Naphtha prices. In the automotive sector, May sales recorded by the Japan Automotive Dealers Association totalled 312,406 units, reflecting a 4.4% decrease year-on-year but a notable 0.66% increase month-on-month. Mitsui Chemicals forecasts a notable increase in sales volume for elastomers, particularly for TAFMER™ (POE), driven by strong demand as a solar cell encapsulant and other end-uses. Japan's manufacturing sector saw its first improvement in a year in May, with increased job creation, rising pre-production inventories, and stable volumes of new orders and production. In the construction sector, despite ongoing megaprojects, there is a severe labor shortage affecting activity levels, with Nikkei 500 Construction (NCON) showing no significant change in performance, indicating subdued construction activities. These factors collectively influence demand dynamics for POE in the Japanese market.

In the German market, POE prices surged in early June amidst various market dynamics. Local prices for Ethylene in Europe have consistently decreased by 20% since March, stabilizing in the current period due to ample supply in the region. The downstream sector saw a decline, with the German Federal Motor Transport Association reporting 236,425 passenger car registrations in May, marking a 2.75% decrease from the previous month and a 4.27% year-on-year decline. The construction sector faced challenging business conditions in the second quarter, affecting average purchasing costs, although supplier delivery times have notably improved. Despite a slight increase in the Purchasing Managers' Index (PMI) this month, it remained below the threshold, indicating a continued but slower contraction in manufacturing activities across the region. Suppliers are actively destocking inventories, contributing to a downward trend in prices over recent sessions. This week's price surge in POE reflects anticipation of a potential retracement by suppliers, leading to a marginal increase in price.

According to ChemAnalyst's expectations, the price of POE in the upcoming sessions is expected to showcase stable to bearish momentum. This stability in POE price is primarily linked to no major change in bidding activities from suppliers and inventory accumulation. However, the current downward trend in POE price replicates inventory destocking, and the decline in Ethylene prices will be a key factor influencing POE prices in the upcoming months.