Volatile Downstream Demand Led to Hydrochloric Acid Mixed Market Sentiments

Hydrochloric Acid prices fluctuated during November 2022 in the Global market, owing to the muted demand from the downstream steel and disinfectant industry. Meanwhile, high inflationary pressure on the input costs of the commodity amid rising energy costs also affected the Hydrochloric Acid prices. In addition, Hydrochloric Acid prices continued to follow an overall downward trajectory due to volatility in the upstream Chlorine prices this month.

Rising inflationary pressures negatively impacted the end-user demand for the commodity and lowered buying sentiments amongst the buyers in the European market. Downstream Steel production remained constrained amidst labor shortages in the European region. Moreover, the escalating cost of living across the region affected the Hydrochloric Acid market in Europe throughout November 2022. At the same time, higher upstream energy prices pushed up the production cost for Hydrochloric Acid and led to output pressure on the market players. Therefore, traders and manufacturers are destocking inventories at lower margins in the regional market towards the end of 2022.

In China, the prices of Hydrochloric Acid were bolstered by the surge in the downstream steel industry demand in late November 2022. Chinese steel manufacturers are attempting to make offtakes in the overseas market, elevating the commodity's prices. Moreover, Chinese manufacturers took advantage of the South Korean material shortage, followed by supply uncertainties. The price of Hydrochloric Acid was assessed at USD 27/tonne FOB Qingdao (China), with an increase of 4% in the Chinese market during the week ending 25 November 2022.

ChemAnalyst predicted that "prices of Hydrochloric Acid are likely to show an increase in December 2022 in the Global market due to anticipated surge in the downstream steel production activities. A restocking activity is expected, followed by the Lunar New Year holidays, and a rebound in Chinese construction activity is likely to elevate the consumption of Hydrochloric Acid in the steel industry.