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Asia NBR demand falls pre-holiday amid shift to electric cars

SINGAPORE (ICIS)–Asia’s demand for
acrylonitrile butadiene rubber (NBR) has shrunk
in the run-up to the Lunar New Year holidays
due to slumping downstream automotive sector,
with consumption being eroded further by
growing production of electric vehicles.

“Demand for NBR has weakened due to the slump
in the auto industry which is undergoing a
transition to electrification,” a rubber trader

The shift to producing more
environment-friendly vehicles translates to
lesser demand for NBR, which has applications
in internal combustion engines.

“The new energy electric vehicles is powered by
a lithium ion battery instead of an internal
combustion engine, which uses a whole host of
auto parts or components [some of which use
NBR],” the trader said.

The automotive industry is a major downstream
for NBR, which is also used in the industrial,
agricultural and footwear industries.

NBR’s wide range of applications include
automotive transmission belts, hoses, O-rings,
gaskets, oil seals, and V belts;  as well
as synthetic leather, printer’s form rollers,
rice rollers, disposable non-latex gloves and
cable jacketing.

Spot NBR prices were assessed flat at
$1,625/tonne CIF (cost, freight and insurance)
China since early January, ICIS data showed.

“Shrinking demand is the key reason why spot
interest this year in the run-up to the Lunar
New Year holiday has dwindled, compared with
previous years where restocking usually picks
up before the festive holiday,” the trader

The Lunar New Year falls on 25 January this
year and China is closed for a week from 24

The Lunar New Year is celebrated in both
northeast and southeast Asia, including, China,
South Korea, Taiwan, Indonesia, Malaysia,
Singapore and Vietnam.

The continued slump in the automotive industry
in China, the world’s largest auto market, has
been weighing on the NBR market in Asia.

For the whole of 2019, China’s vehicle sales
declined 8.2% to
25.77m units, with production down 7.5% at
25.72m units, according to the China
Association of Automotive Manufacturers (CAAM).

It marked the second year of contraction in the
country’s overall car market, with steeper
falls recorded for both sales and production
compared with 2.8% and 3.3%, respectively, in

China-US trade frictions, tighter emission
rules and cuts on subsidies for new-energy
vehicles have been weighing on the car market.

In India, demand for NBR has also slowed down
due to weakness in its automotive sector.

India’s vehicle sales in
declined 13.1% year on year to
1.41m units, while production for the month
fell 5.2% to 1.82m units.

Two-wheelers accounted for about 75% of total
sales, and 77% of total production in December,
according to the Society of Indian Automobile
Manufacturers (SIAM).

Focus article by Helen Yan

Photo: Electric cars in Hangzhou city,
Zhejiang, China (Source: Imagine

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