SINGAPORE (ICIS)--India’s demand for ethylene propylene diene monomer (EPDM) is expected to remain weak because of the slump in the automotive industry amid a sluggish economy.
Declining feedstock ethylene costs and ample supply of cheaper EPDM from the Middle East and Europe also weighed on demand and exerted downward price pressure.
On 2 October, EPDM prices fell to $1,600-1,650/tonne CFR (cost & freight) India, down by $100/tonne from the previous week.
Ethylene spot prices were at $775/tonne CFR northeast (NE) Asia on 1 October, down by about 15% since early August, ICIS data showed.
“Demand for EPDM is really weak due to the slump in the auto industry in India, limited liquidity and tight credit,” a trader said.
A weakened Indian rupee against the US dollar and cheaper deep-sea product had also curbed spot appetite for Asia-origin EPDM imports.
“The weakened rupee against the US dollar also makes it tough to import EPDM from Asia. There is little spot interest as we expect the Indian economy to remain sluggish in the near term,” another trader said.
India’s automotive industry has been reeling from a downturn for 10 consecutive months, largely due to a combination of rising fuel prices and tightening credit amid a slowing economy.
Vehicle sales in August 2019 plunged to a 21-year low of 1.82m units - the lowest level since the Society of Indian Automobile Manufacturers (SIAM) began tracking the data in 1997-1998.
Passenger car sales in August fell 41% year on year while sales of commercial vehicles for the month declined 39% year on year.
EPDM is used mainly for automotive parts as it has strong resistance to heat, ozone and chemicals.
The applications include seals for door, window, trunk, hood, O-rings, washers, radiator hoses and coolant hose.
Other applications include roofing membranes, electrical cable jointing, conveyor belts, mountings, tank/vale lining, rubber rollers and spongers.
Focus article by Helen Yan