EPDM Price to Fluctuate at Highs in H2, 2024
Introduction: In the first half of 2024, the EPDM market price remained stable after rising. Supply of goods was tight, supporting the market price. In the second half of 2024, the demand for EPDM is poised for recovery. The overall sales pressure may be not large although the supply may rise. Therefore, the EPDM market price is envisaged to fluctuate at highs in H2 of 2024.
China’s domestic EPDM market price in the first half of 2024 showed a trend of rising and then fluctuating slightly, which was basically consistent with the price trend forecast in 2023-2024 China EPDM Market Annual Report, but EPDM price was slightly higher than the expected one. One reason for this was the tight supply of goods, as EPDM producers voluntarily gave up their profits to promote sales from September 2023, and by December 2023, the inventory at the factory had been greatly reduced, causing a long-term shortage of goods. The other reason was that in 2024, there were many unit shutdowns both at home and abroad, and the shutdown period was long, making the available supply even tighter. In addition, the sea transportation problems in Saudi Arabia were obvious, affecting the arrival of goods. The overall tight supply of goods caused EPDM market price to run at a premium. The demand was weak in April, and with the downstream costs at high levels and profits declining, market users’ acceptance of high-priced EPDM decreased, which in turn impeded the raise of EPDM prices, so the market price fluctuated slightly. For example, the average market price of EPDM in 2024 was RMB 22,313/mt, which was 0.49% lower than the same period of 2023. On June 27, the EPDM market average price closed at RMB 22,775/mt, which was 6.18% higher than the beginning of 2024. Looking at the long-term product price, the current EPDM price is basically close to the average price, and it is expected that the future price level will fluctuate around the average price.
The peak of the average market price of EPDM in the first half of 2024 occurred in mid-April, at RMB 22,887.5/mt. In January to March, market users mainly held watch sentiment, and the supply was limited. Therefore, the price remained stable despite weak demand in January and February. In March, as the news of unit maintenance continued to be released, and with the downstream demand increasing, the market price rose. In the second quarter, as downstream demand weakened, the acceptance of high EPDM prices by downstream users decreased, but due to the stable cost, the market price only fluctuated slightly, with limited downward adjustments. Therefore, in the first half of 2024, EPDM rubber was more affected by supply shortages, and the market price remained at a relatively high level.
EPDM market price stabilized after rising in the first half of 2024, as the supply and demand imbalance caused a dilemma for EPDM prices to rise or fall.
With little change in supply and demand, the market price stabilized after a rise.
In the first half of 2024, the operating rate at EPDM producers remained at a high level. Although some units were shut down for maintenance in the first half of the year, the domestic EPDM output in the first half of 2024 still reached around 149.6kt, up 3.74% from the same period of 2023. The domestic output increased significantly. In January-May 2024, EPDM imports reached 63.8kt, up 4.42% from the same period of 2023. The total new supply of EPDM industry in China increased to around 213.4kt, up 4% from the same period of 2023. The supply was basically the same as that of last year, but there are some places worth paying attention to. After the domestic factories reduced their prices and inventories in September 2023, the finished product inventory level in China was mainly low. The inventory was low due to the expected maintenance. In addition, the arrival of Saudi Arabian cargo has decreased, so the low inventory level reduced the sales pressure, which has had a positive impact on the EPDM price. Under the influence of the tight supply, the market price showed a notable upward trend in March. However, due to the weak demand in April to June, the EPDM price stabilized, unable to continue to rise.
Overall, the supply and demand of EPDM in the first half of 2024 both saw a slight increase compared to the same period of 2023. However, the positive support for market prices from the supply side was stronger than the negative impact of demand. Therefore, in March, when demand was slightly better, there was an increase in EPDM prices, and in the later period when demand recovered to a dull state, EPDM prices remained at a high and stable level.
Feedstock price fluctuated downwards.
As an important feedstock for EPDM, propylene price had its lowest point in the first half of 2024, with a price of RMB 6,475/mt in early January, and its highest point was in mid-June, with a price of RMB 7,295/mt. In the first half of 2024, the average domestic propylene price (Shandong, cash and carry, ex-works, inclusive of tax, etc.) was RMB 6,856/mt, down 2.18% from the same period of 2023. Considering the weakening support from the feedstock price, EPDM's cost-side support weakened. However, due to the strong support from the tight supply side, EPDM prices and industry profits rose.
Looking ahead to the second half of 2024, the factors affecting EPDM market price will be concentrated on the supply and demand fundamentals. On the supply side, the inventory level may be not high, and the pressure on product sales may be not great, so the positive driving force for the price impact in the short and medium term may be stronger, which will affect the price to fluctuate at a high level in the second half of 2024.
In the second half of 2024, the domestic EPDM inventory is expected to have an increase, but the overall industry inventory level is expected to be in a normal state, from a tight supply to a stable supply. Jilin Petrochemical and ARLANXEO will both have some scheduled maintenance in the second half of 2024; during the maintenance period, the inventory will be consumed mainly, which will alleviate the supply-side pressure. Combining the expected demand for the second half of 2024, the rebound and improvement in the third quarter is not expected to be high. At the same time, looking at the imported goods, although the total import arrivals in the first half of 2024 increased compared to the same period of 2023, the arrivals from the first trade partner, Saudi Arabia, were significantly lower than the same period of 2023. Therefore, the expectation for a significant increase in imported goods arrivals in the second half of 2024 is not high, with monthly arrivals ranging from 11 to 13kt. Overall, the supply level may remain low, which may provide support for EPDM prices, so the market may be in a state of multi-party competition, and EPDM prices may fluctuate within a narrow range.
The price of EPDM is characterized by seasonal variations, with price rises most likely in October and November.
The market shows a trend of fluctuating downwards for the first nine months, and after September, there is a strong likelihood of price hikes, especially in October and November, when the peak consuming season begins. This demonstrates the seasonality of EPDM price fluctuation. The increasing market trend stalls in December as EPDM steadily reaches the slack season for consumption. It is anticipated that the EPDM market will continue to exhibit the above seasonal fluctuation pattern in H2 of 2024, the fluctuation range may be narrower than before.
Overall, the supply-demand imbalance will still remain at the EPDM market in the second half of 2024. Looking at the third quarter, with weakened market demand in July and August, EPDM prices may decline slightly. In September, with some domestic factories’ units going offline for maintenance, the market supply may enter a tight state, coupled with the support of demand improvement expectations, EPDM prices may fluctuate upwards. In the fourth quarter, supply is expected to maintain conventional production, and the market's sales pressure is expected to increase, coupled with the end-of-year cash collection, there may be cases of producers making small concessions to promote sales, thereby causing the market price to show a slight decline. The EPDM price will fluctuate in the second half of the year, but the overall price is expected to be high and volatile. It is expected that EPDM market price may weaken slightly and then fluctuate upwards in the second half of 2024, ending with a slight decline, with the overall average price remaining at a high level of fluctuation. The main price range for the mainstream price may be between RMB 20,000 and 25,500/mt, based on the seasonal rule of judgment, the peak of the second half of 2024 is likely to appear in September and October, and the low point may appear in November and December.
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