Surprising Downturn in US Polybutadiene Rubber Prices Amidst Tire Industry Woes

Texas, USA: Unexpected declines in Polybutadiene Rubber prices have been observed in the US market during the first two weeks of August. The Polybutadiene Rubber prices plunged by 1% in the first week of August, followed by a 2.3% drop in the second week. The factors that caused the decrement in Polybutadiene Rubber prices include the underperformance of the tire industry, the stable manufacturing sector, reduced feedstock costs, and surplus inventories. The tire sector, a significant consumer of Polybutadiene Rubber, has struggled, impacting its demand. Despite the automotive industry performing well, weak sentiments in the tire industry have affected Polybutadiene Rubber demand.

The US Tire Manufacturers Association (USTMA) revised its 2023 outlook, forecasting a decrease in tire shipments to 325.4 million units from a previous projection of 334.2 million units. This reduction is seen across most categories except Original Equipment (OE) passenger tires. Despite the automotive sector's growth, the tire industry's struggles have impacted Polybutadiene Rubber demand. The recently released data for August indicates a decrease in the projected tire shipments across five out of six categories, including original equipment and replacement tires. The only exception to this trend is observed in the Original Equipment (OE) passenger tire segment, where an upward revision to the forecast was made.

In July, US sales of new light vehicles surged by over 18% compared to the previous year, maintaining a positive trend throughout the year with a year-to-date increase of over 13%. However, this automotive growth has not translated to the Polybutadiene Rubber market. Information from the US Bureau of Economic Analysis indicates that sales in July remained consistent, slightly surpassing the previous month. The NADA predicts that the strong sales momentum witnessed in the H1 of 2023 will continue in the H2 of 2023. As a result, they have revised their sales forecast for 2023. However, the surge in automobile sales did not impact the Polybutadiene Rubber market.

While the automotive sector has shown strong performance, the tire industry's struggles have notably affected the Polybutadiene Rubber demand overall. Despite the automotive sector's growth, the subdued sentiment in the tire industry has limited the potential downstream requirement for Polybutadiene Rubber.

Furthermore, the costs of Polybutadiene Rubber feedstocks, Butadiene, have decreased, leading to lower prices. Excess inventories have worsened the situation, intensifying supplier competition and causing prices to drop. The Purchasing Managers' Index (PMI) for the US increased slightly to 49 in July, indicating potential stabilization in the manufacturing sector and helping to prevent price increases in the Polybutadiene Rubber market amidst complex conditions.