High Inflation Putting European Construction Sector in Danger
- 29-Jun-2022 6:35 PM
- Journalist: Timothy Greene
The European market has been under pressure due to the ongoing Russia-Ukraine war for a long time, which has affected the pricing dynamics of several commodities. As per the latest insights, construction raw material prices have been rising owing to market disturbances amidst improving demand dynamics from the downstream industries.
A rise of around 4% has been observed for Zirconium Silicate in the German market during June 2022, primarily driven by high inflationary pressure amidst stable offtakes from the domestic ceramics industry. On the other side, in Germany, another construction sector-related raw material, Sodium Lignosulphonate, prices have also risen in the meantime.
Germany is the largest construction market in Europe; thus, any market disturbance in Germany affects the market dynamics of Europe. Meanwhile, a 1% price has revised in the Polish market during June 2022, where traders heard trying to raise their product prices. However, the price revision in Poland remained marginal owing to inflationary pressure on producers; nevertheless, massive price revision was resisted by ample stock availability in the country.
According to the market sources, builders in Germany and France have been facing difficulties in procuring construction raw materials since the Russia-Ukraine war started. Thus, lifting the prices of most construction chemicals, including Sodium Lignosulphonate, Zirconium Silicate etc.
The latest data released by the European Central bank shows that the inflation rate has reached almost three years high, and the construction cost index has been rising consistently, primarily affecting consumers in the regional market.
On the other side, the US stagflation threat has also affected the market dynamics of different commodities in the European market. The looming danger of stagnation in the US market has already led to a significant fall in freight cost, as traders are still uncertain about the future demand from the US market.
As per the ChemAnalyst analysis, massive inflation in Europe and supply chain disturbances are likely to be the prime factors behind further price increments. Meanwhile, the US market may take more time to flatten the inflation curve; thus, prices are likely to maintain overall buoyancy. In addition, the European market is also moving forward to stagflation conditions like the USA, which is also a matter of concern for market players.
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