The US TPE Prices to Gain Momentum, as the Production and Supply Uncertainties Rise

The market situation of Thermoplastic Elastomers (TPE) transitioned to a bearish situation across the US market with prices depreciating by around 0.5% in the first week of January 2023. This was largely due to dullness prevailing in the US market and in the importing markets of Canada and Mexico after the termination of the festive season after witnessing a peak in December 2023. The depreciation in prices of TPE is also attributed to falling prices of Ethylene which witnessed a slump of approximately 5% in the US market easing production costs which was also complemented by depreciating prices of Crude Oil which also witnessed a slump of approximately 2%.

The post-festive automotive industry across the US, Canada, and Mexico is largely expected to witness a dullness after witnessing a peak as evidenced by the increment of 13% in automotive sales across the US and a 10% rise across the importing Mexican market, leading to weak demand of TPE. Increasing freight charges which appreciated by more than 90% towards the week ending January 11, 2024, also saw the demand for TPE plummet from the importing Asian market and South American markets. This consequently led to an accumulation of TPE material at US ports. This consequently depreciated the prices of the TPEs traders are expected to receive low volumes due to increasing freight charges as unrests at the Red Sea and Panama Canal extend in January 2024.

The US manufacturing industry also saw a contraction in the manufacturing activities in December which kept the fall in the prices of TPE marginal, despite production costs recorded to have been significantly subdued. Current inflation rates were recorded to show an increment across the United States with current inflation rates assessed at 3.1% in December 2023, with the Federal Bank maintaining an exhaustive observation of the potential hikes in the interest rates.

Prices of TPE are expected to increase during the rest of January 2024 as production costs are expected to increase, despite the prevailing post-festive dullness as prices of feedstock Styrene are expected to increase due to expensive imports of Benzene from the exporting South Korean market as freight charges increase. Production rates of TPE are also anticipated to be controlled by key manufacturers as post-festive dullness in the US, Canadian, and Mexican markets are likely to prevail which is complemented by waning international demand as freight costs appreciate with base prices of freight costs also expected to witness an increment.