For the Quarter Ending September 2023
North America
In the third quarter of 2023, the North American Fumed Silica market, especially in the United States, exhibited a complex performance. During the first two months of the quarter, the product's price in the US market increased by approximately 4%. This price hike was primarily attributed to rising labour costs and inflation in construction materials. Price increases occurred more frequently compared to the previous month. Domestic market merchants proactively restocked in anticipation of future demand conditions. Increased demand from potential customers and limited stock availability also contributed to the price surge. Manufacturing activities showed an increase from June to July, with continued growth in total new orders. However, the pace of expansion slowed for the second consecutive month, reaching its lowest rate since April. In the last month of the quarter, the price of Fumed Silica decreased by approximately 0.5% due to decreased demand from the downstream construction industry. Furthermore, the US Construction industry added 11,000 jobs in September 2023, maintaining historically low unemployment rates. Contractors increased pay rates faster in this sector due to labour shortages, and the number of people working on non-residential construction projects declined as firms struggled to find enough workers amid tight labour market conditions.
Asia
In the third quarter of 2023, the Fumed Silica market in Asia, with a focus on the Japanese market, witnessed a fluctuating performance. Initially, over the first two months of the quarter, the product's price experienced a 3.5% decrease, largely due to reduced demand from the construction sector. The month of August, known for high humidity and the typhoon season in Japan, resulted in diminished construction activities. These adverse weather conditions contributed significantly to the decreased demand for Fumed Silica, an essential component in construction materials. Economic indicators echoed this slowdown, as Japan's manufacturing activities saw a slight decline in August 2023, marking the third consecutive month of falling factory activity. However, there was a slight uptick in the price of Fumed Silica, rising by approximately 3% in the last month of the quarter. This increase was primarily driven by a surge in demand from the construction industry as construction activities picked up momentum. Additionally, input price inflation reached its highest level since May, driven by increased raw material costs, rising energy and freight prices, and the impact of a weaker yen. These factors, combined with heightened production costs, exerted pressure on manufacturers to raise their output charges.
Europe
During the third quarter of 2023, Fumed Silica prices in the Eurozone steadily declined due to multiple factors, with the construction industry experiencing a significant downturn. This decline was further worsened by increasing interest rates, discouraging potential construction projects. A key highlight was the reduction in housing activity, especially in the German construction sector, which had a direct impact on residential building projects, leading to decreased construction activities. Amidst this challenging environment, the broader economic landscape in the Eurozone presented mixed signals. The manufacturing sector showed signs of contraction, reflecting the difficult economic conditions at the end of the quarter. Despite falling input costs, businesses continued to implement cost-cutting measures, including reductions in employment, purchasing activity, and inventories. Consequently, many firms extended their production cutbacks, reflecting an overall sense of caution and uncertainty that pervaded the economic outlook. The Eurozone's economic performance in the third quarter of 2023 was marked by the construction industry's decline, subdued housing activity, and a cautious business environment, as it grappled with various challenges.
For the Quarter Ending June 2023
North America
A continuous decline has been observed within the second quarter for fumed silica in the USA, followed by the previous quarter. The feedstock silane has supported the price trend for fumed silica during the entire quarter. As per the data, Producer Price Index by Commodity for Industrial Chemicals fell from 328.7 (April) to 309.7 (June). Moreover, inflation in the US has been high for a very long time. Consecutively, consumer spending has declined, leading to a decline in PPI, which has affected demand fundamentals within the USA. The reduced demand for the product, coupled with an abundance of supply, supported the price trend. Additionally, US Federal Reserve continues to hike interest rates to tamp down inflation, muted trading activity. Smooth and cheaper import of Fumed Silica from overseas strengthened the supply chain in the country. However, the demand did not meet supply, further contributing to the bearish trend. Moreover, the US economic upturn was slow in June as dependence on services grew rapidly, which contributed to a further decrease.
Asia
During the second quarter, fumed silica prices in China experienced a continuous downturn, followed by the first quarter. The declining feedstock silane prices within the quarter supported the downturn of product prices. Low feedstock silane prices put downward pressure on the product’s manufacturing process. Moreover, the abundant availability of the material and insufficient demand dragged the market dynamics to showcase the downtrend. The price reductions of Fumed Silica in the Chinese market are primarily driven by producers engaging in competitive selling strategies to offload excess inventory. The construction PMI index in China dropped marginally, reaching approximately 58.200% in May 2023, compared to the previous month's 63.900%. This indicates a lack of robustness in the country's construction sector. On the other hand, the supply of products remained high in China. The demand fundamental was affected by the rainy season which hampered the construction project. Therefore, the demand in the construction materials market has not performed well, and the demand for Fumed Silica has decreased accordingly during June.
Europe
For another quarter, the fumed silica prices were declining in the European market amid low demand for products from the downstream construction industry. As per Eurostat, Producer prices in the Industry in Germany dropped marginally, reaching approximately 135.1 in May, compared to March’s 136.9. This indicates a lack of manufacturing and trading activities. Moreover, a substantial decline in the European Production construction industry was observed from 114.1 to 113.7 in May, which is expected to follow in June too. Supply chains of the construction sector across the European region saw a notable improvement at the end of June. The price of the product declined in the global market which further helped to strengthen the supply in Europe. During June, the construction industry was facing challenges, including rising costs across materials, labor, energy, lending, and insurance. Shortages and delays in materials, along with labor shortages and a skills gap, further compound the industry's struggles. Project volumes were slowing, and there was a growing responsibility to design and deliver projects sustainably. Moreover, the feedstock silane prices, supported the fumed silica market throughout the quarter to showcase a downtrend.
The price of Fumed Silica decreased in the quarter ending March 2023 due to reduced demand from paint and cosmetics manufacturers in the US market. This has led to increased availability of the commodity in the market, resulting in suppliers reducing their quotes to boost sales. Additionally, the costs of freight and silane, the product's base material, have decreased, contributing to the price reduction this quarter. The market situation is bearish, with moderate supply and demand from paint, cosmetics, and electronics manufacturers. Fumed silica is being reliably delivered to customers in standard quantities, with no significant disruptions reported in the first quarter of 2023. Thus, the price of Fumed Silica was quoted at USD 6210/MT FOB New York (USA) in March 2023.
The cost of Fumed Silica has increased, despite a reduction in silane prices and a decline in freight charges in the APAC region. The price inclination resulted from the surge in demand from downstream companies, particularly those in the cosmetics, electronics, and paint manufacturing sectors, who are eager to increase their production rates. The current market situation can be classified as bullish, with moderate supply and consistent delivery of Fumed Silica to customers in prevailing volumes, without any significant disruptions. The product demand remained strong among the paints and coatings, electronics, and cosmetics industries for production purposes, coupled with gradual growth in international inquiries. As per the latest pricing update, the price of Fumed Silica was quoted at USD 6470/MT FOB Shanghai (China) in March 2023.
In the European market, the cost of Fumed Silica has decreased due to reduced demand from downstream businesses. The sellers attributed the price drop to the weakened downstream demand in the German market. The market situation is considered bearish, with a moderate supply of fumed silica being delivered to consumers without any disruptions. The demand for this product remained modest, and it is pursued on the need basis by the cosmetics, electronics, and paints and coatings industries for production purposes. Additionally, the reduction in the cost of silane, the base material used in fumed silica production, has led to a decline in fumed silica prices. Therefore, the price of Fumed Silica was quoted at USD 6240/MT FOB Hamburg (Germany) in March 2023.
