US and European TPE Prices Stabilize During Early November Amid Ample Inventories

The U.S. Thermoplastic Elastomer (TPE) market remained stable in early November 2024, with supply and demand largely balanced, despite slight improvements in the automotive sector. TPE suppliers continued to rely on existing inventories, as warehouses remained well-stocked. Although the automotive industry saw a marginal recovery, it did not significantly alter TPE supply dynamics. Export conditions, however, remained unfavorable due to the lingering effects of the ILA strike, which disrupted TPE shipments to key markets in Canada and Mexico.

Production costs for TPE showed mixed trends. Styrene prices dropped by 7%, while ethylene prices remained largely stable after a 26.5% decline in October 2024. Despite a force majeure declaration at Shell Chemicals' ethylene plant in Pennsylvania, with a production capacity of 125,000 MT/year, the impact on U.S. TPE production was minimal. Nonetheless, across US production of the commodity decreased, with the American Chemistry Council reporting a drop of 8.1% in September 2024, totaling 8.2 billion pounds of major plastic resins. Sales and internal use also declined by 0.5%, indicating weak demand for the product with data for October 2024 still being pending at the time of writing.

In the U.S. automotive sector, vehicle sales rose 1.7% month-on-month in October 2024, reaching an annualized 16.0 million units. The increase in retail sales helped offset disruptions from extreme weather in the Southeast. Despite a sluggish year due to high financing costs, a rate cut by the Federal Reserve in September provided some support for TPE demand. However, rising interest rates and ongoing election uncertainty continued to dampen consumer sentiment, preventing significant fluctuations in  the prices of the product

On the export front, U.S. plastic exports, including TPE, declined by 3.1% in September 2024, with October data still pending. In terms of volume, plastic resin exports fell by 7.2% from August, totaling 1.9 million metric tons.

In Europe, TPE prices remained stable, particularly in Belgium and Germany. Suppliers continued to work with existing TPE inventories, and any improvements in key sectors, such as automotive, were minimal. In Belgium, car registrations fell by 5.5% in October compared to the previous year. In Germany, new car registrations rose by 6%, reaching 232,000 units, aided by an additional working day. However, overall demand for TPE in both regions remained moderate.

Production costs for TPE in Europe were similarly impacted by lower feedstock prices. Styrene prices dropped by 6%, and ethylene prices fell by 5% in October, which helped reduce the cost of TPE production across the region.

Looking ahead, TPE prices in both North America and Europe are expected to rise in November 2024. The upcoming festive season is expected to boost sentiment in the automotive industry, leading to higher TPE demand. Additionally, reduced production rates during the holiday period are likely to create a TPE shortage, tightening market conditions further.