The global Thermoplastic Elastomers (TPE) market witnessed stability entering March 2025, as demand conditions remained sluggish, with prices largely unchanged from February 2025. The subdued demand for TPE was primarily attributed to weak performance in the automotive sector. Expectations of a spring recovery in the automotive industry have mostly not materialized across the European and North American markets, while the Asian market continued to experience post-festive dullness, resulting in prices to depreciate across the Asian.

Market conditions varied across regions. The U.S. market saw low production levels, similar to Europe, while Asia witnessed liquidation activities as suppliers sought to offload inventories.

Production costs also varied, with the U.S. market experiencing stable costs, as indicated by the stability in feedstock Styrene prices, which remained unchanged entering March 2025. This stability further reinforced steady production costs. However, production was reported to be limited, as U.S. production of major plastic resins totaled 8.3 billion pounds in January 2025—a 6.2% decrease compared to the prior month, according to data from the American Chemistry Council. This constrained supply availability, while U.S. producers maintained strict pricing and were unwilling to trade materials at lower prices.

Demand conditions for TPE remained sluggish. While U.S. vehicle sales rose 3.2% month-on-month (m/m) to an annualized 16.0 million units in February—slightly below the consensus expectation of 16.1 million units—this provided only moderate to minimal support to the U.S. TPE market.

In the European market, plant turnarounds and low production levels continued to impact supply. Additionally, the price of feedstock Styrene rose by approximately 9%, exerting upward pressure on production costs for TPE. Automotive sales also remained sluggish, with domestic car production reaching 361,500 units in February, marking a 3% decline compared to the same month last year, which further pressured TPE prices downward.

Across the Asian market, TPE prices declined as demand conditions remained unfavorable. Automotive sales witnessed a decline of approximately 12% in China, contributing to a bearish market sentiment. Post-Lunar New Year, factories gradually resumed production, but export conditions continued to remain unfavorable, with Southeast Asian countries—namely Malaysia—experiencing a market slowdown due to the festive Ramadan period, while Vietnam remained sluggish post-Tet festivities. In the Vietnamese market, automotive sales fell by 2% in January 2025, with expectations of further depreciation in February 2025, keeping trading activities on the sidelines. Meanwhile, Malaysia experienced a sharp decline of approximately 27% in automotive sales, further dampening demand for TPE.

As per expectations, prices of TPE are anticipated to climb, supported by lower production levels and higher production costs, primarily due to rising feedstock Styrene and Ethylene prices. This is corroborated by the European market, where reduced production days and major producers maintaining curtailed run rates since November 2024 have continued to support the TPE market. However, the Asian market is likely to remain bearish, influenced by low production levels and Chinese producers gradually increasing operating rates, which is expected to lead to ample supplies across the Southeast Asian market.