US Fumed Silica Prices Surge, Europe Sees Decline Amid Supply and Labor Challenges
US Fumed Silica Prices Surge, Europe Sees Decline Amid Supply and Labor Challenges

US Fumed Silica Prices Surge, Europe Sees Decline Amid Supply and Labor Challenges

  • 19-Sep-2023 12:22 PM
  • Journalist: Peter Schmidt

In August 2023, the price of Fumed Silica in the United States experienced a dramatic and noteworthy uptrend. This surge in price was primarily attributed to a confluence of factors, including increased labor expenses, inflation in construction materials, and supply chain disruptions. One of the key drivers of the price hike was the escalating labor costs in the construction sector. The ongoing labor shortage and rising wages put additional pressure on construction-related expenses, ultimately impacting the pricing of Fumed Silica. The rampant inflation in construction materials further exacerbated the situation, leading to higher production costs for manufacturers. Another significant factor contributing to the price increase was the heightened demand from potential customers.

The downstream construction sector was strongly interested in securing Fumed Silica to meet future demand conditions. Merchants in the US domestic market responded proactively by actively restocking their inventory in anticipation of future demand spikes. However, manufacturers faced challenges due to constrained supplies, particularly in the latter part of the month when a hurricane disrupted supply chains and caused delays in product deliveries within the region. These supply chain disruptions further limited the availability of Fumed Silica, leading to an imbalance between supply and demand. Throughout August, there was a noticeable increase in Fumed Silica demand, primarily driven by a surge in inquiries from the construction sector. Manufacturers struggled to keep up with the rising demand due to limited product quantities in their inventory. This shortage in supply created a discernible gap between supply and demand, putting upward pressure on Fumed Silica prices.

Meanwhile, in stark contrast, the price of Fumed Silica in Europe witnessed a consistent decline of approximately 4% during the same period. This decline was primarily attributed to the sharp downturn in the construction industry, exacerbated by rising interest rates. The German construction sector, in particular, experienced a significant reduction in housing activity during the third quarter, leading to a notable decrease in residential building projects. To counter these challenges, construction companies in the Eurozone adopted a cost-cutting approach, including significant reductions in employment and purchasing activities. This led to weakened demand for Fumed Silica in sectors such as construction, cement, and pottery throughout August. A sharp and accelerated downturn in Fumed Silica purchasing activity occurred in the German construction sector midway through the third quarter. This decreased demand for materials coincided with a sixth consecutive monthly improvement in vendor delivery times as pressure on supply chains eased.

While the demand for Fumed Silica remained sluggish in the US due to supply constraints and labor costs, the Eurozone faced a contrasting scenario with declining demand in the construction sector. The construction industry's recovery in both regions is expected to be a challenging and prolonged process, with significant hurdles to overcome in the near term.

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