The European Thermoplastic Elastomer (TPE) market witnessed a bullish market situation during the second half of May 2024. Prices of TPE witnessed increments of approximately 1% and 1.6% across the German and Belgian markets respectively, despite the cost support being absent from the production side.

In terms of upstream support to the European TPE market was absent as prices of feedstock Styrene and Ethylene continued a descent, with prices declining by approximately 4% and 10%, respectively, which continued to have a negative impact on the production costs.

The appreciation in the European TPE prices was primarily occurred due to the plant shutdown of HEXPOL Plants 1 and 2 at Lichtenfels, Germany, which had undergone maintenance turnaround during the first half of May 2024 for 9 days and were reported to have been operating at 71% of their operating capacities, which might have created an acute scarcity of TPE.  Moreover, severe flooding across North Europe was reported to have resulted in power outages leading to production losses and creating challenging conditions in transportation and logistics. Intense rainfall led to flooding across areas of Germany, Belgium, and the Netherlands overnight into Saturday, May 18. Streets and buildings were inundated, prompting evacuations and restricting trucking operations.

In terms of demand, the demand for TPE from the downstream automotive industry was recorded to have been healthy during April 2024. As per the data released by ACEA, petrol car sales increased by 7.3% to 328,967, driven by double-digit gains in key markets such as Spain (+24.1%), Germany (+18.6%), and Italy (+14.1%). Yet, their market share decreased from 38.1% to 36% compared to the previous year. Concurrently, the diesel car market maintained stability at approximately 118,000 units, representing close to 13% of the market. Despite substantial declines in major markets like Italy (-21.1%), Spain (-19.3%), and France (-18.1%), a significant increase in Germany (+28.2%) helped to offset these losses, providing some support to the European TPE market.

Overall, in April 2024, the European Union car market grew by 13.7%, with new registrations totaling 913,995 units, driven by strong increases across all major markets: Spain (+23.1%), Germany (+19.8%), France (+10.9%), and Italy (+7.7%), indicating favorable conditions of demand for TPE from the downstream automotive industry. Only Belgium deviated from the trend where automotive sales depreciated by approximately 11% during April 2024.

Overall prices of TPE across Europe are expected to increase due to challenging conditions in transportation and the acute scarcity of the product, despite support from production costs being absent.