Energy Cost-Push Results In GGBFS Price Rise Despite a Deterioration in Demand

The global construction sector has been facing huge market disturbances for the past several months, while the demand dynamics have declined due to high input costs. The data shows that the price of construction raw materials, including GGBFS (Ground Granulated Blast Furnace Slag), has remained firm during the first half of July 2022.

Consistent price pickups for several commodities have affected the pricing dynamics of GGBFS in India and China; a rise of around 1 and 2 percent has been observed in India and China, respectively, by the mid of July 2022. Traders expect these pricing dynamics to remain unchanged in the coming months, as the high input costs are not letting prices gain stability of decline.

Cement manufacturers have raised concern over the rising cost of production due to fuming energy values, which has already built up the inflationary pressure on consumers. In addition, rising inflation has also been affecting the labor, which they have to raise sooner or later.

On the other side, the European market has been battling with prolonged firmness in the price of Natural gas, which has already harmed producers' margins. As per the insights, European buyers are paying more for the new cargoes due to Asia's huge LNG summer demand. In addition, Europeans are compelled to pay more than Asian buyers for September purchases in the derivative market. According to the data, Germany's GGBFS price has also risen by more than 4%.

The US market has been at risk of huge inflationary pressure and looming recession across the region. A similar price increment of around 2% has been observed for the USA in GGBFS during July 2022, while the demand dynamics are under intense danger. To calm prolonged inflation in the country, the central bank has decided to raise the 75 base points rate for the July session, which will further affect the country's economic activities, especially the construction sector.

According to the ChemAnalyst analysis, GGBFS prices will likely remain buoyant until the end of this month in the US, Europe, and Asia, as despite low demand, the effect of high input cost is not going to vanish any time sooner.