July Sees Notable Rise in HNBR Prices Driven by Soaring Butadiene Costs and Robust Demand

In the global market the price of the Hydrogenated Nitrile Butadiene Rubber (HNBR) witnessed notable increase in July. This increase in the HNBR price is primarily linked to the increase in the price of the major feedstock particularly Butadiene in the market. Increase in the HNBR demand from the downstream market coupled with the increase in the sales from the manufacturers has majorly contributed to the increase in the price of the HNBR in the market.

In the Japanese HNBR market, prices have remained stable to marginally increased this month. In the feedstock market, Butadiene prices saw a 7.1% increase in July, while Acrylonitrile experienced a slight 1.4% decrease. The automotive sector reported strong performance, with 405,174 units sold in July, reflecting an 8.45% month-on-month increase and a 6.89% year-on-year rise. From the manufacturer's perspective, Zeon Corporation recorded an 8.3% year-over-year increase in sales from its Elastomers Business, totaling ¥60,200 million, driven by growth in synthetic rubbers with 12% increase in the YoY volumes and the 3% decrement in the QoQ volumes. Sales volume stayed consistent year-over-year and quarter-over-quarter, with strong demand, despite some partial production stoppages in the automobile industry. In the Aerospace sector, Mitsubishi Heavy Industries (MHI) reported a 15.0% year-over-year increase in order intake, reaching ¥1,847.5 billion for the quarter ending June 30, 2024, primarily due to robust performance in the Defense & Space sectors. The combination of rising demand and positive supplier actions has contributed to the stable to marginally increasing HNBR price trend in Japan.

In the US market, HNBR prices have remained stable to marginally increased this month. The feedstock market saw Butadiene prices decrease by 7.3% from previous highs. In the downstream market, the automotive sector experienced a 5.1% drop in new vehicle sales in July compared to June, with 1,275,935 units sold, marking a 2.9% decline from July 2023. Meanwhile, Boeing's Q2 earnings in the aerospace sector showed a 16.6% revenue decrease to $16.9 billion and a 32% decline in deliveries to 92 units. The ISM Manufacturing PMI also fell to 46.6 in July 2024 from 48.5 in June, indicating the sharpest contraction in US factory activity since November 2023. The HNBR price trend has been marginally consolidating over the past few months but has stabilized to slightly increase in July, suggesting a consolidation phase that reflects balanced market conditions after gradual price increases.

The price of HNBR in the global market is anticipated to show a bullish trend in the upcoming sessions. This expected increase in the HNBR price is primarily driven by the anticipated rise in Butadiene prices, which is likely to elevate production costs and, consequently, the ex-quotation prices of HNBR from manufacturers. Additionally, the improvement in downstream market demand is expected to positively impact the overall HNBR market, contributing to the anticipated price rise.