Mounting Construction Sector Challenge Weakens the European Calcium Hydroxide Market Fundamentals

Hamburg, Germany: Over recent quarters, the European construction industry has faced significant challenges, with a notable decrease in the number of new projects initiated. The dwindling demand from downstream construction has notably affected the market dynamics for crucial chemicals, including Calcium Hydroxide. Ongoing inflationary pressures prompted the European Central Bank to raise interest rates to alleviate inflation concerns. In its latest meeting, the ECB opted to maintain rates at 4%, following a sequence of ten consecutive hikes.

As per the market sources, in October 2023, the Eurozone's Construction PMI dropped to 42.7 from the previous month's 43.6, marking the 18th straight decline in construction activity, hitting its fastest pace this year. The decrease was fueled by a significant drop in new orders, influenced by the ECB's stringent tightening measures, impacting Calcium Hydroxide demand. All sectors, including housing, commercial construction, and civil engineering, have experienced bearish market sentiments. In the construction industry, which utilizes chemicals like Calcium Hydroxide, this downturn reflected reduced activity due to weakened demand and declining projects across various construction segments.

In addition, witnessing the challenges faced in procuring Natural Gas last year, the Calcium Hydroxide market players have prepared themselves for winter consumption this year. Europe faced a surge in gas prices as it urgently sought alternatives to compensate for reduced Russian pipeline supplies. In August, the prices surpassed €300 per megawatt-hour, exceeding their typical levels by more than tenfold. However, According to Gas Infrastructure Europe, in November, gas stocks were about 99 percent full to cater to the requirements of downstream Calcium Hydroxide manufacturing firms.

Furthermore, the ChemAnalyst database has shown that the prices of Calcium Hydroxide have plummeted by approximately USD 10 per ton in Germany's domestic market. Despite the lower operating rates of the manufacturing firms, the availability of finished Calcium Hydroxide stocks was sufficient as the procurement from the downstream construction industries has remained tepid. The market participants have reported that the market transactions have consisted of small orders. According to the Federal Statistics Office, The annual German Consumer Price Index (CPI) is expected to rise 3.5% in November, down from the 3.8% increase reported in October. The expected drop in the inflationary pressure will contribute to alleviating the strains from the purchasing power of the Calcium Hydroxide end-use industries.

According to the pricing intelligence of ChemAnalyst, the prices of Calcium Hydroxide are expected to remain bearish in the last month of the year 2023. The reduction in the inquiries from the downstream construction sector is likely to impact the market fundamentals of Calcium Hydroxide on a broader level. In addition, the ongoing destocking season at the year-end will further prompt the manufacturers to release the inventories at reduced prices.