Global Nitrocellulose Prices Climb in July Amidst Supply Disruptions and Improved Demand

The Nitrocellulose market in Asia and the Middle East experienced a modest growth of approximately 1.4%, influenced by a combination of rising production costs and various regional disruptions. In Asia, the ongoing monsoon season has created significant hurdles for logistics and transportation, which has contributed to increased production costs and limited Nitrocellulose availability. The resurgence of the automotive industry in India, observed in July 2024, has also played a role in this price increase. As automotive production and sales rebounded, the demand for Nitrocellulose, used in automotive coatings, saw a moderate uptick, exerting pressure on the downstream coating industries.

Despite these price increases, overall demand for Nitrocellulose in Asia remains weak due to the prolonged monsoon season. This weather-related disruption has notably affected the coating industry's demand in the terminal construction sector, leading to a slowdown in this area. Meanwhile, in the Middle East, which is heavily dependent on Nitrocellulose imports from South Asia, there has been a noticeable improvement in demand due to a recovery in the automotive sector. This improvement has led to higher prices for Nitrocellulose in key markets such as Saudi Arabia. Furthermore, regional security tensions in the Red Sea have exacerbated supply chain issues, as cargoes transporting Nitrocellulose from Asia to the Middle East have been rerouted. This rerouting has increased lead times and further strained the supply chain, compounding the market's challenges.

In contrast, the Nitrocellulose markets in Europe and North America have seen more moderate demand. In North America, particularly in the U.S., the rebound in the automotive industry has positively impacted Nitrocellulose demand. U.S. vehicle sales showed a significant increase of 4.2% month-on-month in July, reaching an annualized rate of 15.8 million units. This rebound in sales is noteworthy given the previous month's decline, which was affected by a cyberattack on CDK Global, a major provider of dealer management software. Year-to-date vehicle sales have reached 9.08 million units, representing a 1.4% increase compared to the same period in 2023. Although unadjusted sales volumes were 2.0% below the previous year's levels, the average daily selling rate (DSR) slightly decreased from 51,971 units in July 2023 to 50,925 units this year. Notably, passenger vehicle sales rose by 9.1% month-on-month, while light-truck sales increased by 3.1% month-on-month. Light-trucks now account for 81% of total sales, up from the previous year's share.

In Europe, demand for Nitrocellulose was lower due to the summer holiday period, which traditionally results in decreased activity. Domestic automotive orders dropped by 18%, and foreign automotive orders fell by 9%, reflecting a seasonal slowdown in demand. This decline is attributed to the general decrease in industrial activity and lower demand for Nitrocellulose during the summer months.