US tariff uncertainties weigh on nylons and automotive industry growth

The automotive industry, a major consumer of nylon, is projected to rebound in 2025, according to S&P Global analysts. However, this anticipated recovery faces potential setbacks due to uncertainties surrounding US tariff initiatives, which could hinder growth prospects.

Recently, at this year's World Petrochemical Forum, it was noted that potential changes in US policies could affect vehicle demand, leading many manufacturers to adopt a cautious position on changing interest rates and trade dynamics.

"Policy implications from the new administration are creating a more uncertain and unstable demand environment as uncertainty weighs on demand," S&P Global analysts said.

Market participants have previously expressed optimism that the automotive sector could bolster nylon prices in the US. While a recovery in demand from the automotive market is expected to start in April, concerns persist regarding the potential impact of tariffs and the stabilization of benzene prices, both of which are critical for nylon production costs.

Nylon is utilized in various automotive applications, including engine components, interior parts, electrical systems, and under-the-hood components, thanks to its strength, durability, and lightweight properties.

The automotive sector is the largest consumer of nylon 66, which accounted for more than half of the total nylon consumption in engineering applications, according to data from Chemical Market Analytics by OPIS.

Market feedback suggests that the anticipated increase in automotive demand, which was expected to drive nylon demand, has not materialized as expected. It was seen as weak last year and is increasing slightly this year, according to sources.

This shortfall has been attributed to inflation rates, affordability issues affecting purchasing decisions, and uncertainties caused by the current US administration's commercial strategies.

"It looks like compounding for automotive applications is improving," a source said at the beginning of the year.

But by mid-March, another source said: "Any optimism in the automotive industry is currently being tempered by all of the uncertainty due to trade issues."

Nylon consumption in downstream derivative markets has remained stagnant, primarily due to flat demand from the construction and automotive sectors. However, a recovery in automotive sector demand could significantly increase the overall demand for nylons, particularly nylon 66. This sector, however, faces several challenges, including political uncertainties, economic factors, and competitive pressures that may impact its growth trajectory.

Platts assessed US Nylon 6 (PA6) at 94 cents/lb Ex-works Southeast on March 24, stable on the day. US Nylon 66 (PA66) was assessed at 144 cents/lb Ex-works Southeast, stable on the day.