Stearic Acid Prices Drop in May Amid Lower Palm Oil Costs and Weak EV Demand
16/05/2024 (Chem Analyst) - In the first half of May 2024, the prices of Stearic Acid (Rubber Grade) in the European market fell by approximately 1.2%. This decline was primarily driven by decreasing feedstock Palm Oil prices and reduced demand from the downstream electric vehicle (EV) segment of the automotive industry.
During this period, Palm Oil prices witnessed a decline of around 13%, significantly reducing the production costs of Stearic Acid (Rubber Grade). This easing of cost pressures contributed to the overall price drop.
Consumer demand shifted from EVs to conventional internal combustion engine (ICE) vehicles, which is also weakening the support from the automotive industry. In April 2024, overall automotive sales was observed to be decreased by about 8%, with further declines expected during the summer months, which typically see a slowdown in the automotive sector across Europe.
Data from Germany’s federal motor transport authority (KBA) highlighted a significant drop in EV sales for several European automakers. In the first quarter of 2024, brands like Citroen, Jaguar, Polestar, and Volkswagen experienced a decrease of around 30% in EV sales, while Porsche, Peugeot, Mini, Fiat, and DS saw reductions exceeding 40%. The sudden end of tax advantages in late 2023 played a significant role in this decline, further reducing the demand for Stearic Acid (Rubber Grade) from the rubber industry.
The downturn in the EV segment also affected the East Asian market. In South Korea, most domestic automakers reported lower year-to-date (YTD) sales in the first four months of 2024. Prices of Stearic Acid (Rubber Grade) decreased by approximately 6% in April 2024. Hyundai's deliveries were hit by plant stoppages for maintenance and refurbishment, impacting demand for Stearic Acid (Rubber Grade). KG Mobility saw a 44% drop in sales, followed by Renault Korea with a 17% decrease, and Kia with a 3.2% reduction. Only GM Korea reported a YTD increase of 2% to 9,216 units, slightly stabilizing Stearic Acid (Rubber Grade) prices.
The prices of Stearic Acid (Rubber Grade) are expected to continue depreciating due to weakening demand from the rubber industry during the peak summer season, which typically sees lower transaction activities. Additionally, the ongoing decrease in Palm Oil prices in Southeast Asia is anticipated to further lower the production costs of Stearic Acid (Rubber Grade), contributing to the downward price trend. By understanding these market dynamics, stakeholders can better navigate the fluctuating prices of Stearic Acid (Rubber Grade) and adjust their strategies accordingly.