GGBFS Market to Struggle with Low Demand, Prices Poised to Fall in the US and Germany
GGBFS Market to Struggle with Low Demand, Prices Poised to Fall in the US and Germany

GGBFS Market to Struggle with Low Demand, Prices Poised to Fall in the US and Germany

  • 02-Feb-2024 3:29 PM
  • Journalist: Gabreilla Figueroa

Prices of Ground Granulated Blast Furnace Slag (GGBFS) are expected to depreciate in February 2024 across the German and US markets due to moderate demand for cement from the construction sector.  The February month of 2024 forecasts no significant improvement in the construction sector across the United States and Germany which is expected to wane the demand for cement consequently reducing the demand of GGBFS.

Across the United States, the commercial building sector of the construction industry witnessed significant improvements during January 2024 including nearshoring activities in Mexico which provided some support to the US GGBFS market. The positive effects of nearshoring activities are recorded to have been translating on the Mexican economy, which is clearly evidenced by an increment of 3.9% in the exports on Y-O-Y basis during the first half of 2023, and FDI reaching at an all-time high attracting an investment of USD 5.024 billion in the first half of 2023. Despite the positive effects certain obstacles in the Mexican economy prevent from investment sentiments to forecast a fully optimistic outlook on the demand of GGBFS such as lax regulations and application of law and high criminal activity in the country which may lead to corrupt practices in the official processes and result in disruptions in operations. The weakness of Mexico's legal system has drawn the attention of several officials, who see it as a continual source of uncertainty and danger for businesses along with presenting uncertainties across the US GGBFS market.

Moreover, the government's preferential treatment of the Federal Electricity Commission (CFE) and its reliance on oil exploitation rather than renewable energy sources for energy self-sufficiency make President Andrés Manuel López Obrador's energy policy a barrier to the nearshoring trend. Like this, one of the biggest obstacles for international businesses moving their manufacturing lines to Mexico is the unstable state of the nation's water and logistical infrastructure further causing uncertainties in the US GGBFS market.

Across Germany, the construction sector is expected to remain in retrenchment as it continues to perform poorly during the beginning of the year 2024 with investments sentiments continuing to be historically low, thus waning the demand of GGBFS. The construction sector across Europe continues to witness a downturn during the beginning of the New Year with all three construction segments, namely housebuilding, commercial building and civil engineering activities witnessing significant contractions compelling the demand of GGBFS to remain at an all time low. Housebuilding continued to remain the worst performing segment of the construction sector with several businesses forecasting a negative outlook and decline in orders. This is expected to reduce the demand for GGBFS as the demand from the downstream cement industry is expected to be detrimentally affected.

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