China EPDM demand weakens on automotive slump, virus fears

SINGAPORE (ICIS)–China’s demand for ethylene propylene diene monomer (EPDM) is expected to weaken in the near term as slumping downstream automotive industry is being aggravated by the coronavirus (Covid-19) outbreak in the country.

Spot prices of medium ethylidene norbornene (ENB)-grade EPDM on 12 February fell to $1,650-1,750/tonne CIF (cost, insurance and freight) China, down by $25/tonne from the previous week, ICIS data showed.

“Demand is really weak due to the slump in the automotive sector, which has been further worsened by the virus outbreak, while the feedstock ethylene and propylene costs are also falling,” a trader said.

China’s vehicles sales in January declined by 18% year on year to 1.94m units, with production down 24.6% at 1.78m units, industry data showed.

Vehicle sales in the world’s biggest automotive market have been contracting for two full years – falling by an average of 8.2% in 2019 and 2.8% in 2018, according to the China Association of Automobile Manufacturers (CAAM).

Disruption to car manufacturing operations because of the coronavirus outbreak in China could hit the industry hard, and possibly have a long-term adverse impact on the global automotive market, the association said.

EPDM is used in the automotive and construction industries for various seals due to its excellent resistance to environmental factors such as ozone, ultraviolet (UV) and general weathering.

Typical applications are window and door seals (glazing), waterproofing sheets and electrical gaskets.

The Covid-19 outbreak, which is believed to have originated in the central Wuhan city, dashed initial expectation of restocking activities as the Chinese government extended the Lunar New Year holiday in a bid to contain the epidemic.

Transport and shipment restrictions impeded the movement of materials and labour, disrupting the entire supply chain, thus, hampering trades and stifling demand.

Several cities and provinces in the country extended the holiday until 10 February, while Hubei province – where Wuhan is located – was in lockdown, with businesses and factories shuttered until at least 14 February.

The Lunar New Year holiday started on 24 January in China and was originally supposed to last a week.

Focus article by Helen Yan

Photo: Checking of information of vehicles and passengers near a highway exit in Yinchuan, northwest China’s Ningxia Hui Autonomous Region. (By CHINE NOUVELLE/SIPA/Shutterstock)

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