The thermoplastic elastomers (TPE) markets in North America and Europe remained stable in early January 2025, with varying supply conditions shaping the outlook. In the U.S., oversupply and logistical challenges led to inventory backlogs, particularly in Houston warehouses. Packaging line operating rates were at 60%, contributing to delays in shipping TPE inventories. Unfavorable weather conditions further compounded the problem, pushing final TPE prices upward as clients paid premiums for transportation.

Despite these issues, export conditions improved. The Association of American Railroads reported a 3.4% increase in chemical railcar loadings to 31,747 for the week ending January 4, 2025, aiding TPE movement out of North America. TPE production costs remained stable due to consistent Styrene prices, while the potential for a strike on January 15, 2025, was averted through a contract agreement between U.S. longshoremen and the Maritime Alliance, ensuring continued port operations, with current details of the agreement being withheld from the public.

TPE supply in the U.S. remained ample, with the American Chemistry Council reporting 9 billion pounds of TPE produced in November 2024, a 5.8% increase from October. Demand for TPE in the U.S. was strong, driven by the automotive sector. U.S. new-car sales reached 15.9 million units in 2024, a 2.2% increase from the prior year, fueled by strong demand for hybrid vehicles and replenished inventories.

In Europe, the TPE market faced continued challenges. Weak demand, driven by a slowdown in the automotive industry and seasonal production dips, placed downward pressure on TPE activity. The supply of TPE was sufficient, with no major disruptions, but order volumes remained low. Many companies took extended holidays in December, further slowing production in January. Port congestion in European hubs like Hamburg, Rotterdam, and Antwerp delayed TPE exports, with Hamburg terminals operating at 75%-80% yard utilization.

On the demand side, TPE demand from the automotive sector in Europe remained sluggish, with car production in December 2024 dropping by 10% year-on-year to 232,900 units. In total, Europe produced 4.1 million cars in 2024, flat compared to the previous year but 12% below pre-crisis 2019 levels. TPE production costs remained high as Styrene prices rose by 6.4% in early January 2025.

TPE prices are anticipated to rise in both the U.S. and Europe, though driven by different factors in each region. In the U.S., the main driver for this increase is the rising price of Styrene, a key feedstock for TPE production, which is expected to push up production costs. Additionally, the market is seeing increased efforts to restock, with suppliers preparing for a surge in demand as conditions improve. Export conditions, especially to major importing markets such as Brazil, Mexico, and Canada, are also improving, further fueling optimism. These factors combined are likely to lead to higher orders from these markets, putting U.S. TPE suppliers in a favorable position to raise prices.

In Europe, while similar price pressures from Styrene are expected to support an increase in TPE prices, the situation is slightly different. The anticipated price rise is largely attributed to the typically lower TPE production in January, as many manufacturers scale down production during the early months of the year. This reduced output, paired with high Styrene prices, is expected to create upward pressure on prices. However, demand for TPE is expected to remain subdued due to ongoing holiday seasons, with many companies experiencing thin orders. This will likely result in muted market activity in Europe, tempering the overall impact of the anticipated price increase.