Throughout the first half of May 2024, Thermoplastic Elastomer (TPE) prices in the US market have maintained an upward trajectory, marking a collective rise of around 2%. This surge can be directly linked to the escalating costs of key feedstocks, namely Styrene and Ethylene, which experienced respective increases of approximately 2% and 2.5%. The price hikes in Styrene can be largely attributed to extended lead times for deliveries, a repercussion of severe flooding in regions like Louisiana and Texas. Consequently, major Styrene producers, including Atofina Chemical Inc. and Americas Styrenics (a joint venture between CPCCLP & Trinseo LLC) in Louisiana, were compelled to declare force majeure, leading to a shortage of Styrene and subsequent escalation in TPE production costs across the nation.

Similarly, a scarcity of Ethylene was also evident as significant plants underwent force majeure declarations or scheduled industrial maintenance. Examples include Shell Chemicals in Potter Township, Pennsylvania, facing a force majeure due to a leakage, and Dow DuPont in Louisiana undergoing industrial maintenance, both contributing to Ethylene scarcity and subsequent increases in TPE prices.

On the demand front, TPE experienced a downturn in April 2024, correlating with an 8% decline in automotive sales for the same month. Major US automotive manufacturers, such as GM and Ford, witnessed declines of 2.2% and 26%, respectively. Passenger car sales fell by approximately 11% to 264,482 units, while SUV and Truck sales experienced a slight dip to 1,063,494 units. These indicators underscored reduced demand from the downstream automotive industry, maintaining downward pressure on TPE prices.

In terms of manufacturing activities, Both output and employment made increasingly positive contributions to the manufacturing sector across the US as compared to April, while the drags from new orders and stocks of purchased components moderated. Moreover, input prices continued to rise sharply in May, the rate of inflation accelerating to register the second-largest monthly increase seen over the past eight months, which also supports the current pricing trend of TPE.

Looking ahead, TPE prices are anticipated to continue their ascent in the coming weeks. This projection is bolstered by the likelihood of increasing freight charges, potentially leading to costly imports of upstream Benzene and subsequently higher production costs of feedstock Styrene. Furthermore, with the peak driving season anticipated in June, heightened transaction activities in the downstream automotive and auto parts industry are poised to strain existing TPE  inventories, further driving up the prices of the product.