EU car sales jump steeply in March, registering an increase of 87.3% compared to March 2020, according to the latest data from European Automobile Manufacturers’ Association (ACEA).
While the figures represent a recovery from the slump suffered in March 2020, at the start of the pandemic, they are also consistent with current market feedback of an extremely buoyant demand for polymers from the auto sector.
Indeed, many market participants for months described the automotive sector demand as extremely healthy, a trend that has continued unabated since Q4, despite some slowdown caused by semiconductors shortages.
Moreover, the slowdowns in automotive production triggered by shortages of raw materials imply an increase in activity later in the year as the sector attempts to catch up with the current loss in production.
In fact, since the beginning of the year, some polymer producers received letters from companies in the sector highlighting that the current slowdown because of lack of raw materials is temporary, suggesting to prepare for a pickup in production later in the year.
A persistent strong demand from the auto sector will continue to drain the short supply of many polymers, a short supply partly linked to a multitude of disruptions created by the pandemic and likely to continue for the rest of 2021.
After polymer prices climbed to record highs in April and are arguably set to continue to do so in May for some polymers, evidence is building of a slow, rather than a swift return to normality as it is possible that demand will remain high amid tight availability.
With many buyers at breaking point, there is cause for concern that it will take months for availability to improve. At the same time, many polymer buyers may not see prices retreat from the current highs in 2021.