Amidst a Slump in Construction Demand, German Calcium Hydroxide Prices Dwindle in February

Hamburg, Germany: Over the last few quarters, the German construction industry has experienced a downturn due to ongoing inflationary pressures. This downturn has had a notable impact on the demand for various raw materials, including Calcium Hydroxide. Germany's economic challenges in 2023, marked by high inflation, elevated interest rates, weak export demand, and strikes, resulted in a 0.3% contraction in GDP for the year. This economic slowdown has further affected the demand for Calcium Hydroxide.

The ChemAnalyst database has shown that the prices of Calcium Hydroxide have plummeted by approximately USD 8 per ton in Germany on an FD basis in February on a month-on-month basis. As per the observed market scenario, Calcium Hydroxide purchasing has remained sluggish due to sufficient supply meeting domestic needs. The construction industry has been a drag on the German economy at the start of the year, experiencing a notable decrease in new orders. This has led construction firms to cut back on their purchasing. The sector's outlook remains pessimistic, with new orders continuing to fall sharply, weakening the market fundamentals of Calcium Hydroxide. Furthermore, one of the leading downstream manufacturers, Heidelberg Materials, has decided to halt clinker production at its Hanover cement plant in the latter half of 2024. The company will now concentrate on producing cement at the site and will maintain operations as a grinding facility. This move follows a significant drop in cement sales attributed to sluggish construction demand in Germany amid the prevailing economic conditions.

On the other hand, construction activities have started to pick up momentum in the Asian market. The demand from the paper industries in China has been escalating, strengthening the market fundamentals of upstream Calcium Hydroxide. In addition, during the Spring Festival holidays, manufacturing activities witnessed reduced operations, leading to relatively limited availability of Calcium Hydroxide. Furthermore, Chinese manufacturers have anticipated an increase in inquiries from the downstream paper and construction sectors; therefore, Calcium Hydroxide manufacturers have kept their prices at elevated levels.

According to the pricing intelligence of ChemAnalyst, the prices of Calcium Hydroxide might witness a downturn in the near term amidst a reduction in procurement volumes from downstream construction industries in the European market. In addition, construction firms have expressed more pessimism regarding future activity, citing economic weakness and domestic political factors as potential constraints. However, the Asian Calcium Hydroxide markets might witness a contrary price trend as inquiries from downstream construction industries are likely to increase, reinforcing the demand fundamentals of Calcium Hydroxide in the forthcoming weeks.