Early-May Stability Shows US HCl Market Amid Decreased Downstream Sales
Early-May Stability Shows US HCl Market Amid Decreased Downstream Sales

Early-May Stability Shows US HCl Market Amid Decreased Downstream Sales

  • 17-May-2024 4:40 PM
  • Journalist: Gabreilla Figueroa

During the initial week of May 2024, Hydrochloric Acid (HCl) prices in the US market displayed stability following a downward trend observed in the preceding month. In April 2024, the US HCl market experienced a 1.3% price reduction. This dip was attributed to decreased HCl sales volumes. However, HCl downstream industries, particularly steel rebar, saw minimal fluctuation at 0.1%, while upstream caustic soda prices surged by 9%, signaling sustained HCl demand.

Additionally, Olin Corporation's Q1 report showcased the condition of the chlor alkali sector, despite a year-over-year revenue decline of approximately 20.9%. This decline primarily resulted from reduced sales volumes and lower prices, notably affecting caustic soda sales. Total sales for the period ending March 31, 2024, amounted to USD 1,635.3 million, marking an 11% decrease compared to the same period last year.

Moreover, during the month, HCl production supply remained robust due to continuous operations. Regional manufacturers increased their production to meet the rising demand for Chlor Alkali products including HCl in the first quarter, ensuring a steady supply to the market. However, HCl demand decreased towards the end of April, leading producers to reduce prices. Additionally, there was a noticeable decrease in freight charges during the month, benefiting traders and businesses. Freight costs from China to North America decreased by approximately 10%, while the reverse route experienced an even more significant drop of 15%. This reduction in freight expenses not only alleviates the financial burden on traders but also enhances overall business efficiency and profitability.

Despite a price decrease in HCl caused by high inventory levels and sluggish demand towards the end of the month, the HCl downstream steel industry maintained strong demand amidst increased construction activity. In April, the construction sector saw a significant employment rise of 9,000 jobs, representing a robust year-over-year increase of 3.2% in industry employment, totaling 258,000 jobs. Additionally, Nucor Corporation, a leading North American steel manufacturer, reported a 7% increase in total steel mill shipments from Q4 2023, although there was a 2% decline compared to Q1 2023. Earnings within the steel mills segment also rose in Q1 2024 compared to Q4 2023, driven by higher average selling prices and increased volumes, particularly in sheet mills. However, earnings in the steel products segment decreased due to lower average selling prices and reduced volumes, while earnings in the raw materials segment increased.

In conclusion, analysts anticipate that HCl prices are likely to stay steady for the month, with slight weekly variations likely due to the pressure on inventory driven by downstream demand.

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