Weak European automotive demand affects rubber, nylon outlooks

European new car registrations increased only 0.8% in full-year 2024, primarily driven by Spain, which experienced a growth rate of 7.1%, according to the European Automobile Manufacturer's Association data.

In December, Spain saw a 28.8% surge in new car registrations, bolstering the overall European market growth rate of 5.1%, the ACEA showed Jan. 21.

However, a source in Spain attributed this growth to the floods last year, which resulted in the loss of around 100,000 vehicles, saying, "The rise in automotive demand is not primarily driven by consumer demand but is instead attributed to an extraordinary situation."

The Northwest European market saw a decline in new car registrations in 2024, reflecting the weak demand in the automotive sector. France experienced a 3.2% drop, while Germany saw a 1% decline, ACEA said. However, the French market saw a modest recovery in December, with new car registrations increasing by 1.5%.

The automotive industry is a key demand driver for styrene-butadiene rubber, nylon and other chemicals.

"The automotive conditions are making things very hard for all rubber markets," an SBR trader said. "Last year, both the synthetic rubber and butadiene rubber markets saw a loss in demand and profitability." The trader anticipates some improvement in the second half of 2025 but remains cautious.

A producer highlighted the significant impact of weak automotive demand on the commodity markets, saying, "There are plant closures for upstream materials. Producers are losing money to produce butadiene, so they close production. But this results in less materials readily available to produce SBR and PBR."

Eni's Versalis will close its butadiene extraction unit at its Brindisi petrochemical site by the end of January 2025, according to local media, citing union officials.

Nylon market participants expressed optimism in January regarding a potential rebound from the automotive industry by the second quarter of 2025. However, this optimism may be premature, as there are currently no substantial indicators supporting a significant recovery.

A consumer of nylon 6 noted that their February orders were not significantly better than January's.

While there is hope for an uptick in demand from the automotive sector, it remains to be seen whether this will materialize. Some industry sources are exploring production rationalization strategies, aiming to consolidate operations into a single site to achieve better run rates.

Additionally, fluctuations in the Euro-US dollar exchange rate have impacted the growth of the end-use market, especially in the automotive sector, prompting buyers to adopt a more conservative approach.

Platts, part of S&P Global Commodity Insights, assessed the free-delivered European spot price of bright-grade nylon 6 resins at Eur1,710/mt DDP NWE on Jan. 22, stable on the day and up Eur50/mt on the week.

Platts assessed the FD European spot price of engineering grade nylon 66 resins at Eur2,350/mt DDP NWE on Jan. 22, unchanged on the day and on the week.

Platts last assessed the FD European spot price of 1500-1502 dry grade SBR at Eur1,810/mt on Jan 17, up Eur10/mt from Jan. 10.