Hamburg, Germany: The price of Polybutadiene Rubber (PBR) in the German market experienced a significant drop of 4.7% during the week ending on 13th October. This surprising decrease came amidst a backdrop of declining downstream demand, fluctuating economic indicators, and improving conditions in the German manufacturing sector.

The German PBR market has been grappling with inflationary pressures. However, the German consumer price index reported a year-on-year increase of 4.3% in September, marking a notable decline from the previous months. This drop in inflation can be attributed to the aftermath of Russia's full-scale invasion of Ukraine, which led to heightened uncertainty in global markets and disrupted supply chains. The easing of inflationary pressures raises hopes of a potential return to economic stability, which positively impacted the PBR market.

Nevertheless, the economic landscape of the German PBR market is far from homogeneous. According to KBA Federal Transport Authority data, Germany witnessed a marginal 0.1% decline in passenger car sales in September 2023. This decline is particularly significant, marking the first decrease in car registrations since January. In recent months, the automotive industry in Germany has experienced positive growth thanks to favorable supply chain conditions and government incentives aimed at boosting car sales. The dip in car sales during September was primarily attributed to a substantial 28.6% drop in the sales of electric vehicles powered by batteries. This decline followed the discontinuation of an environmental subsidy for commercial buyers, underscoring the impact of government policies on market dynamics. Hence, amidst the underwhelming market performance of the automotive sector, the demand for PBR slumped.

Regarding manufacturing, the Purchasing Manager's Index (PMI) showed slight improvement, rising from 39.1 in August to 39.6 in September. However, it's important to note that this uptick is modest, and the manufacturing sector continues to experience a state of contraction, impacting the supply of PBR. The primary driving factor behind this downturn was a sharp drop in new orders, although it was somewhat less severe than the previous month. Weaker demand across the sector led to lower prices, with both input costs and output charges continuing to decrease throughout September. Nevertheless, there were some glimmers of hope within the PBR supply chain. Reduced demand and higher inventory levels across various industries resulted in ocean containers and truck capacity remaining readily available. Furthermore, ocean container rates either returned to pre-pandemic levels or dropped even lower, a positive development for PBR businesses reliant on global shipping. Hence, improvement in supply chain conditions further supported the fall in PBR prices.