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INSIGHT: Polymers See Slow Auto Demand in September

September 7, 2020
The pace of the recovery has so far failed to gain traction after the holiday season.

European polymers see slow auto demand pick up in September, dashing hopes of a much-anticipated rebound.

Plastic raw material suppliers say the automotive sector remains a drag on total demand. The pace of the recovery has not changed even in September.

Post-lockdown recovery

After countries eased lockdown measures in the spring, participants anticipated that the auto sector would bounce back in September. By then, as the argument went, players along the chain will have had time to lower stocks built when the industry ground to a halt.

But currently the rate of the auto sector recovery appears the same as it has been since the end of the lockdowns. Demand is improving but at a slow pace.

Nevertheless, the mood is still somewhat upbeat because for now at least demand is moving in the right direction despite the increases in infections.

Nylon margins under pressure

In fact, producers of nylon 6 (PA6) are targeting a price increase from August to September. This will help to cover the increases in costs absorbed during the past few months.

On the other hand, while it is too early in the month, market feedback suggests that nylon 66 (PA66) prices look set to roll over.

However, PA66 prices have been coming down from the peaks and margins on some accounts are still relatively healthy. The major issue for producers is still the low sales volumes.

Other markets

The slow demand from the auto sector is not only being felt from the PA markets. Players in other engineering resins markets, such as ABS, were also concerned about the sector’s persistent slow recovery. One seller noted that while all other market segments are recovering well, demand from the auto sector is still somewhat subdued.

The current market developments in September reinforce the negative outlook scenario that the auto industry will continue to suffer at least until the end of the year.