PAO Prices Diverge in October: Europe Sees Surge Amid Automotive Demand, While Asia Remains Stable

In October 2024, Polyalphaolefin (PAO) prices exhibited contrasting patterns across European and Asian markets. Europe saw a notable increase in PAO prices, driven by heightened demand from the automotive and industrial lubricants sectors in anticipation of the upcoming festive season, alongside supply limitations due to slowed manufacturing activities. In Asia, however, prices remained steady, influenced largely by demand trends in China, which experienced supply chain disruptions that impacted the costs of imported raw materials. As a result, the price of PAO 4cSt FOB Dusseldorf (Germany) rose by approximately 5%, reaching USD 2563/MT, while Asian PAO prices-maintained stability.

The European PAO market saw prices rise this month, fueled by a moderate increase in demand from the automotive sector, particularly as Germany reported a 6.0% year-on-year growth in new passenger car registrations, totaling 231,992 units. Despite this increase, the year-to-date sales remained marginally down by 0.4%, totaling 2,348,066 units, according to the German Federal Motor Vehicle Office. The demand boost, partially linked to the festive season, coincided with limited product availability as supply struggled to meet demand due to reduced manufacturing activity across Europe. However, the overall market sentiment remained subdued, impacted by ongoing economic challenges and geopolitical tensions. Manufacturing activity, while still in recessionary territory, showed a slight improvement in October’s index, though caution is advised as this positive shift reflects only a brief respite from persistent lows. The prevailing economic and political uncertainties continued to weigh on the automotive and construction sectors, sustaining a bearish outlook in the region despite short-term price gains in the PAO market.

Meanwhile, the Asian PAO market remained relatively stable, as balanced supply and demand conditions held prices steady despite some challenges. Demand from the automotive sector was subdued, with lower vehicle production and sales diminishing the need for automotive products like paints, lubricants, and coatings, directly impacting PAO consumption. Additionally, supply chain disturbances and elevated costs for imported materials from Europe posed pricing pressures; however, the easing of freight rates helped offset these impacts. With demand for lubricants remaining moderately weak, the overall stability in supply-demand dynamics allowed PAO prices to hold steady across Asia.

According to ChemAnalyst, PAO prices are projected to decrease in both the European and Asian markets in November 2024, primarily due to weaker demand from downstream industries. The automotive and industrial sectors are expected to encounter ongoing challenges in the global market, which will likely result in a significant reduction in PAO consumption. Additionally, eased freight rates and the typical year-end slowdown in consumption are anticipated to further contribute to the decline in PAO prices, as reduced demand puts downward pressure on costs.