Europe IBAP reaches eight-month high in May

LONDON (ICIS)–Europe automotive-linked petrochemical prices saw the sharpest rise of the three major auto producing regions of the US, Europe and Asia in May, increasing by €3.15/tonne of total vehicle weight (TTVW) compared with April, the Europe ICIS Basket of Automotive Petrochemicals (IBAP) showed on Wednesday.

The Europe IBAP reached an eight-month high in May, with price rises largely driven by crude oil and building block petrochemical cost increases.

The largest hikes were seen in polyols and isocyanates, the feedstocks for polyurethanes (PU). Polyethylene terephthalate (PET) and base oils were the only European markets where prices fell, and drops were marginal.

The Europe IBAP increased by $4.34/TTVW in US dollar terms, with gap between the US IBAP – the highest of the three major auto producing regions – and Europe was at an eight-month low.



The upside for the European IBAP has outstripped the US IBAP for three consecutive months, as the US has struggled with increasingly confused macroeconomic signals. Both US light vehicle and passenger car year-on-year sales growth have lagged behind European passenger car sales growth so far in 2016.

Looking to the future, and Europe’s key automotive petrochemicals are positive on all future indicators except profitability, analysis of the ICIS Chemical Market Confidence Index (CMCI) showed.

Negativity on profitability is likely related to firmer crude oil prices and macroeconomic uncertainty, and may also have been magnified by the overwhelming bearish outlook for polyolefins profitability.

The newly launched CMCI for Europe is explained in detail, and the trends going into June discussed in the below animation.



(Please note that this video contains an audio commentary track)

The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle. ICIS tracks the movement of petrochemical raw material costs in auto production both globally and regionally with the weighted ICIS Basket of Automotive Petrochemicals (IBAP).

ICIS produces a monthly Global Automotive report covering the major automotive chemicals markets, the auto-industry, the IBAPs and macroeconomic trends. For more information on the report and details on how to subscribe, please click here

(title image cource: REX Features)