The market situation of Thermoplastic Elastomers (TPE) witnessed stability in the global market during the second week of December 2023 with prices witnessing a stagnation since the third week of November 2023, despite prices of Styrene and Ethylene witnessing significant fluctuations. Across the global market, prices of upstream Crude Oil declined by around 7.4% (within last 4 weeks) with anticipations further depreciation towards the end of December as the OPEC+ board remains largely divided despite Saudi Arabia and Russia extending production cuts by almost 2 million barrel per day.

The stability in the prices of TPE is largely due to the maintenance of an adequate gap between supply and demand which kept prices of TPE from fluctuating. The demand of TPE from the automotive industry remains subdued in Europe and stable in the US and Asia, which kept the demand of TPE constant from the automotive industry.

In the Asian market, the stable demand from the automotive industry kept the consumption rate of TPE constant as major Chinese brands transition towards the electric automotive sector. The scheduled shutdown of a TPE plant owned by HEXPOL TPE Compounding at Foshan, China due to industrial maintenance did not have any effects on the prices of TPE. The industrial maintenance is scheduled for 6 days commencing from 22nd December and terminating on December 27, 2023. This plant is further expected to operate at 80% of its total capacity during this period.

Across the European market, even though no plant shutdowns of TPE were recorded, the ongoing industrial maintenance turnaround of feedstocks Styrene and Ethylene plants did not have any impact on the prices of TPE. The demand for TPE from the automotive industry remains low except in Germany where overall sales of automotive were recorded to have increased in November. Even though the automotive industry in Germany witnessed a healthy turnaround in November, trading activities across the Eurozone remained subdued as recessionary conditions prevailed. This is largely evidenced by automotive sales not recovering in the Dutch, French, Belgian and the British market not recovering.

Across the US market, positive purchasing sentiments are yet to prevail as the festive season advanced. The demand of TPE from the automotive industry remained largely stable on the lower side as evidenced by declining automotive sales in October and not recovering in November 2023. The CPI across the United States was recorded to have unexpectedly increased by 0.1% according to US Bureau of Labor Statistics.

Overall, prices of TPE are expected to increase as festive season improves induces optimistic purchasing sentiments in the downstream automotive industry and exports conditions improve. Furthermore, input prices are expected to deflate in Europe as Germany SEFE secured a $55 billion Natural Gas deal with Norway’s Equinor which covers around 10 billion cubic meters of gas per year starting from January 1, 2024 replacing Russia’s Gazprom which suspended supplies of Natural Gas to Europe via Nord Stream Pipeline.