Muted Auto Sales or Approaching Recession: What has been Driving Down the Isoprene Rubber Prices in the US?

Texas, USA: The Isoprene Rubber prices dropped for another week in the US after being stagnant for four consecutive weeks. A fall of 2.6% was observed in the Isoprene Rubber prices during the week ending on 24^th March 2023. The supply chain issues have eased out in the US along with lesser costs of shipping containers and reduced berth delays, which have been making the export of Isoprene Rubber much more convenient. However, the prime factor behind the price drop of Isoprene Rubber could either be falling demand from the automotive industry or the approaching recession in the country.

As the US market has been going through an economic crisis lately after the collapse of Silicone Valley Bank and Signature Bank, uncertainty has been hovering around the market. The automotive industry, which was slowly recovering, has now been showing underwhelming market performance, directly impacting the offtake of Isoprene Rubber in the market.

March 2023 auto sales seem steady but unspectacular due to the unstable economic climate and affordability issues with new cars, eventually affecting the inquiry for Isoprene Rubber. With the current economic challenges and tailwinds, the anticipated March 2023 volume would be comparable to the prior year's quarter (with the same number of selling days), indicating that sales momentum will be challenging to maintain. According to Eric Watson, the head of sales at Kia, retail sales will remain modest throughout the year, and economic headwinds will restrain the industry as inventory levels increase. If that happens, the demand sentiments for Isoprene Rubber will remain weak as long as the automotive industry starts recovering once again.

Though the US economy is going through an uncertain phase, it still has much momentum and is not in danger of entering a recession right now. Notwithstanding high inflation, the labor market remains extremely tight, consumers are still making large purchases, and corporate profit margins have reached historic highs. If a recession is on the horizon, it will take some time for these forces to change their direction, pushing back any potential downturn until at least Q2 2023. Even then, it is uncertain how easily companies would fire employees after having faced such severe staffing shortages over the previous two years. As the economic conditions are not dominating the US market, the reduction in automotive sales can be blamed for the drop in Isoprene Rubber prices.