Hamburg, Germany:  The European economy has been battered by a challenging macroeconomic environment throughout 2023. Continuous inflationary pressures and volatile energy costs have taken a toll on the purchasing sentiments of Nitrile Butadiene Rubber end-use industries. The repercussions of weak buying capacities have started to reflect with the onset of 2024, pressuring the market fundamentals of various commodities, including Nitrile Butadiene Rubber. Germany, Europe's largest economy, experienced a deepening economic downturn this month. Although there was a slight improvement in services activity, it was not enough to offset a surprisingly sharp deterioration in manufacturing.

The ChemAnalyst database has shown that the prices of Nitrile Butadiene Rubber have shown an increment of USD 50 per ton in the domestic market of Germany this month on a CFR basis. According to market sources, during the low season demand, Nitrile Butadiene Rubber manufacturers have reduced their production rates and adjusted their inventory levels accordingly to avoid overstocking, using this time to carry out maintenance activities and upgrade their production facilities. As a result, there was relatively limited availability of Nitrile Butadiene Rubber finished goods. Additionally, the geopolitical tension between Israel and Hamas has pushed crude oil prices higher, leading to an increase in the manufacturing costs of Nitrile Butadiene Rubber. Furthermore, the rising costs of upstream Butadiene have also supported the upshift observed in the price realizations of Nitrile Butadiene Rubber.

However, manufacturing output decelerated at its slowest pace in eight months, primarily due to a slight stabilization in new orders. Moreover, in February 2024, the Dutch TTF benchmark for European gas prices experienced a decline, falling below €25 per megawatt-hour (MWh), alleviating the pressures from the manufacturing firms. This decrease brought prices to levels last observed during the summer and represented a sharp decline of more than 50% compared to the same period a year ago.

On the other hand, in China, market sentiments have been gearing pace after the completion of the Spring Festival Holidays. Although inquiries from downstream rubber hoses industries have not picked up momentum. According to market sources, downstream production of NBR hoses in China remains low, hovering around 35%, while production of rubber insulation foam is around 20%. The sluggish demand is putting downward pressure on the NBR market.

According to the pricing intelligence of ChemAnalyst, the prices of Nitrile Butadiene Rubber are expected to remain bullish in the European market in the wake of limited production activities. Asian Nitrile Butadiene Rubber market players are optimistic about the market boost supported by a turn in manufacturing activities and a modest improvement in demand from terminal industries.