Sluggish Construction Sector Drives Bearish Price Trend for Glyoxal in Europe and USA

In April 2024, the European market witnessed a decrease in the price of Glyoxal, primarily attributed to sluggish demand from the downstream construction sector. Specifically, in Germany, the price of Glyoxal experienced a monthly decline of approximately 1.5%, reflecting reduced construction activity both domestically and in overseas orders from other European countries. The outlook for the German Glyoxal market for the year remained bleak, as indicated by data from the German Building Materials Association, which reported a 15.3% year-on-year contraction in the production of building materials in the first quarter of 2024, following a 16.7% contraction in 2023.

Issues within the residential property market, including high building costs and weak demand exacerbated by elevated interest rates, continued to weigh heavily. Confidence levels in both the retail and construction sectors also declined, with output decreasing at a slightly quicker pace, primarily driven by significant drops in housing activity. Weak demand and a sharp decline in new business led to job losses and cost-cutting measures across the industry, including reduced input buying and subcontractor use, further influencing the price of Glyoxal.

Additionally, commercial and civil engineering firms continued to experience declining activity, with commercial output witnessing its slowest downturn, contributing to the overall price trend of Glyoxal. Moreover, the downturn in manufacturing activity across the euro zone deepened in April, despite factories cutting prices in response to crumbling demand, prompting firms to once again reduce headcount in an effort to navigate challenging market conditions.

In the US Glyoxal market, a bearish sentiment prevailed with a 7% decline on a monthly basis, attributed to ample Glyoxal availability within the country. Port inventories remained high, further contributing to the market downturn, while demand for the Glyoxal from the downstream construction industry remained subdued. The low demand was exacerbated by climbing inflation in the US market, which posed a significant concern for businesses across various sectors.

According to the US Chamber of Commerce, inflation continues to be a major challenge for small businesses, with over half citing it as a top concern for the seventh consecutive quarter. The Consumer Price Index, a key measure of consumer prices, increased by 3.2% annually in February, slightly higher than January's 3.1% rise. Core prices, which exclude volatile elements and are closely monitored by the Federal Reserve, saw a 3.8% annual increase. These inflationary pressures add further complexity to the market dynamics, contributing to the challenging environment faced by businesses operating in the Glyoxal sector in the US.

According to ChemAnalyst, there is an anticipated increase in the price of Glyoxal in the upcoming month, driven by seasonal factors. With the arrival of warmer temperatures, construction activities tend to escalate, particularly during the summer season, which is favourable for the construction industry. Additionally, the rising mortgage rates in the US market indicate a positive market outlook for the construction industry, which in turn impacts the Glyoxal market. As construction projects gain momentum and demand for construction-related chemicals like Glyoxal rises, the market for Glyoxal is expected to see an upward price trend.