Neoprene Nook

Global Neoprene Rubber Prices Remain Depressed in December 2023 Amidst Economic Challenges and lower demand – ChemAnalyst

  • 08-Jan-2024 2:31 PM
  • Journalist: Harold Finch

In December 2023, Neoprene Rubber experienced a bearish trend globally, primarily driven by the advantageous pricing of core feedstocks, notably Natural Gas and Crude Oil. The market downturn is a result of a combination of factors, including varied demand from the downstream sector and ample inventories held by key producers. The favorable cost dynamics of essential raw materials contribute to the downward pressure on Neoprene Rubber prices in the global market.

In European market during December 2023, Neoprene Rubber prices in Germany, a significant player in the European market, saw a decline of 2.87% FOB-Hamburg. This drop in the price of Neoprene Rubber was influenced by the advantageous pricing of Natural Gas, a crucial feedstock in the production process. However, challenges arose in the automotive sector, evidenced by a notable year-on-year decrease of 23% in new car registrations during December. This decline, along with a 1.55% drop compared to November 2023, was attributed to the premature discontinuation of the environmental bonus for electric vehicle (EV) purchases. Across the Eurozone, December marked a 2.9% year-on-year rise in inflation, breaking a seven-month decline streak, with a 0.2% increase on a month-on-month basis. German construction activity continued its 2023 decline due to market uncertainty and high interest rates, leading to reduced workloads, staffing cuts, and decreased purchasing activity in December. The overall subdued demand from the downstream automotive and construction sectors contributed to the bearish trend in Neoprene Rubber prices for the month.

In the US market, Neoprene Rubber prices experienced a decline of 1.57% CFR-Texas this month, primarily driven by the reduced prices of Neoprene Rubber from major exporting countries in Asia and Europe. Despite a positive trajectory in U.S. vehicle sales, which showed a 3.2% month-on-month increase, reaching 15.8 million units (annualized) in December—surpassing the consensus expectations of 15.5 million units—there were indications of economic challenges. Unadjusted sales volumes, totaling 1.43 million units, reflected a significant 13.0% year-on-year increase. However, the overall economic conditions witnessed a return to a decline in output, and the intensification of the downturn in new orders indicated weaknesses in both domestic and external demand conditions. These challenges prompted firms to make adjustments in their input buying activities.

According to the ChemAnalyst’s projections, Neoprene Rubber is likely to witness bearish trends in the upcoming sessions. This anticipation is rooted in factors signaling a potentially subdued recovery in the European economy. Concerns arise from the underperformance of the Chinese market, posing challenges to its recovery in fiscal year 24 and impacting export business—a crucial factor influencing the price of Neoprene Rubber. Forecasts indicate sluggish growth in the automobile sector, coupled with subdued performance in construction, leading to an expected decrease in demand for Neoprene Rubber.