Weak Downstream Demand Undermines German Nitrile Butadiene Rubber Market Fundamentals

Hamburg, Germany: After demonstrating a bearish run at the start of the fourth quarter of 2023, the prices of Nitrile Butadiene Rubber have stabilized across the European market. Average procurement from the downstream automotive industries has compelled the manufacturers to keep the prices unchanged in the domestic market of Germany. In addition, the cost support from upstream Butadiene was also limited on Nitrile Butadiene Rubber as its prices maintained stagnancy amid the moderate consumption from the downstream Automotive and Gloves industries. In Europe, the macroeconomic conditions have continued to pose challenges for the manufacturing sector, leading to subdued demand in the region's residential and commercial sectors. Meanwhile, in the past few weeks, Nitrile Butadiene Rubber has been declining amidst regional demand concerns.

Germany's central bank has cautioned that the German economy experienced a slowdown in the summer due to sluggish domestic consumption, reduced international demand, and higher interest rates. Furthermore, as per the market sources, the majority of hospitals are either reducing their stocks (approximately 30%) or keeping their Nitrile Butadiene Rubber inventories stable (around 50%) for personal protective equipment (including medical gloves). Additionally, most downstream manufacturers believe that the existing stock will be adequate for the next 3-6 months, further fuelling the bearish market sentiments among the manufacturers. The ChemAnalyst database has shown that the price of Nitrile Butadiene Rubber was settled in the range of USD 2700-2800 per ton in the week ending 20th October.

Furthermore, the price-competitive with the Asian markets has also been a crucial factor in the downtrend observed in the price realizations of Nitrile Butadiene Rubber. As per the insights shared by market participants, Customers are anticipating reduced prices and are shifting their focus to China and Thailand, where Chinese and Thai glove manufacturers provide more cost-effective gloves due to the lower energy costs in those regions.

On the other hand, as per the market sources, Trillium Renewable Chemicals has announced to expand the process of converting glycerol to Acrylonitrile, with Zeton being tasked with designing the demonstration facility. Trillium's project, known as "Project Falcon," is based on its operation of a pilot facility in West Virginia.

According to the pricing intelligence of ChemAnalyst, the prices of Nitrile Butadiene Rubber might gain downward momentum as the demand from the downstream automotive industries is not likely to show major developments.  The Nitrile Butadiene Rubber latex market is anticipated to remain weak beyond the end of this year. Moreover, any increase in demand for Nitrile Butadiene Rubber or restocking within the Gloves and Automotive industries is not expected to materialize until the first half of 2024.