For the Quarter Ending September 2023
North America
The Quicklime prices during Q3 resulted from mixed market sentiments in the North American region. In the H1 of the Quarter, the dropped production run rates along with supply disruptions caused by Hurricane Idalia, and as a ripple effect, limited the availability of stocks in the middle of the Quarter. Moreover, the Qucklime pricing dynamics in the North American region were impacted by the rise in output costs amidst high energy prices. Likewise, an improvement in international and domestic offers prompted the Quicklime market bullishness in the US market for the time being. However, in the second half of the Quarter, the Quicklime prices exhibited a downward trend amidst low demand and sufficient inventories. In addition, on the steel demand side, the US steel producers opted to slow down the production run rates amidst the automakers' union strike in the USA during September 2023. Therefore, the market participants' outlook for Quicklime prices is based on concerns about the weakening downstream demand and fear of recession in the country towards the end of the Quarter. Thus, the price of Quicklime was assessed at USD 195/MT, CFR Texas (USA) in September 2023.
Asia
In the Quarter ending September 2023, the prices of Qucklime in Asia experienced a continued surge due to the increase in international offers and robust demand in the steel production industry. The upward trend in regional demand is expected to continue pushing export prices of Quicklime higher in October as well. Alongside the export prices, domestic production in the downstream steel manufacturing sector also saw an increase, driven by the rising consumption of Chinese steel in the construction and automotive industries. Therefore, the heightened price trajectory of Quicklime in the regional market is a direct result of these factors. Furthermore, merchants across the country reduced their production rates in the first half of September 2023 in anticipation of the Golden Week Holiday in China. Consequently, the price increase observed in September 2023 was primarily due to limited supply, which was in line with the improving downstream demand fundamentals. Additionally, the overall upward trajectory of Quicklime prices was prompted by the supply constraints since August 2023, exacerbated by typhoons in the region and the holiday season in China during the third Quarter.
Europe
The Quicklime prices in the European market were low in the Quarter ending September 2023, backed by the increasing uncertainty in the market related to the new orders in the downstream steel demand, and market players seem cautious about the market situation amidst piled-up inventories. Weak macroeconomic dynamics have dragged prices down since early Q3, followed by September's sluggish downstream consumption. The demand conditions remained weak, with new business declining at the quickest pace, leading to a further marked decline in procurement activity in the Quicklime industry and input buying enthusiasm. The European Quicklime market in September was also affected by the contraction in exports and deterioration in manufacturing activities amidst a cautious approach towards a spike in crude oil values by the downstream buyers. Additionally, the industrial producer price was up in August 2023 by 0.6% and remained resilient in September 2023 with stability in the inflationary pressures in the regional market as per the data released by the Eurostat Commission during this Quarter.
Middle East Asia
The fluctuating Quicklime prices in the Quarter ending September 2023 resulted from mixed market sentiments in the MEA region. The dropped production run rates along with supply disruptions, caused Quicklime prices to rise in the H1 of the Quarter. Moreover, the Qucklime pricing dynamics in the region were impacted by the rise in output costs amidst high energy prices in the Middle East region. Moreover, a revival in the international and domestic offers prompted the Quicklime market bullishness in the US market for the time being. Contradictory, the second half of the Quarter saw the Quicklime prices exhibiting a downward trend amidst low demand and sufficient inventories. In addition, on the steel demand side, the downstream steel producers in the regional market opted to slow down the operational rates amidst slow consumption in the automotive and building sectors during September 2023. Therefore, the market participants' outlook for Quicklime prices was based on concerns about the weakening downstream demand towards the end of the Quarter.
South America
The Quicklime prices in the South American region during the Quarter ending September 2023 were influenced by a combination of commodity pricing factors. In the first half of the Quarter, a decrease in the supply inflow rate, coupled with supply disruptions caused by expensive imports, led to limited stock availability in the regional market. Additionally, the pricing dynamics for Quicklime in South America were affected by increased production costs due to high energy prices in the exporting nations. Conclusively, the market saw a temporary boost in the United States due to improved international and domestic offers. However, in the latter half of the Quarter, Quicklime prices started to decline due to reduced demand and ample inventories. On the steel demand front, steel producers slowed down production rates in Latin America amidst the economic slowdown during September 2023. As a result, market participants are now concerned about weakening downstream demand and the possibility of a recession towards the end of the Quarter.
For the Quarter Ending June 2023
North America
During the second quarter of 2023, Quicklime prices reached an all-time low due to various factors affecting the market. The key reasons included reduced demand from the downstream steel industry, alongside a decline in export demand caused by higher interest rates and increasing inflation. This situation compelled manufacturers to cut production costs and suppliers to reduce their material stocks in response to an oversupplied market. Despite electricity costs being subsidized, which helped maintain moderate production levels, the overall market sentiment remained bearish. The resumption of operations on the West Coast towards the end of May also had some impact on the market dynamics. The primary factors contributing to the plunge in prices were weak demand from the domestic as well as from the regional market amidst slow economic growth in the US. These factors played a significant role in driving down Quicklime prices. The price depreciation is projected to pause in June, as the Federal Reserve's decision to put an ease on interest rate hikes at the end of June 2023.
Asia
During the second month of the 2nd Quarter, Quicklime prices exhibited mixed market sentiments, driven by supply disruptions and stagnant demand from the downstream steel industry in the mid of the quarter. However, in the H1 of Q2, there was a decline in Quicklime prices, mainly due to low demand fundamentals and an oversupplied market experienced by traders. This was a result of low demand from the downstream steel industry, which coincided with China's Labour Day Holidays and reduced buying sentiments in both domestic and offshore markets. Toward the end of the 2nd quarter, the Quicklime industry experienced a balanced market. This was primarily attributed to the depreciation in natural gas prices, an increase in inventory levels of the product in the Chinese market, consistent domestic supplies, and stability in downstream demand. The price fluctuations of Quicklime were as follows: a 10.3% depreciation in April, followed by a 4.3% appreciation in May, and another 2.7% decline in June. By the end of the 2nd quarter in 2023, the assessed price of Quicklime was USD 142/MT FOB Qingdao (China) in June 2023.
Europe
After experiencing a significant drop in March 2023, the prices of Quicklime in Europe remained unchanged, mainly due to a lack of demand from the steel sector. Throughout the 2nd Quarter of 2023, the market situation continued to be down due to an abundant supply of stocked material and lowered demand across the region. Logistic strikes and worker operations being halted resulted in cargo movement restrictions, alongside rising inflation and reduced export orders from overseas. As the 2nd Quarter progressed, prices of Quicklime further decreased because the downstream demand persistently slowed down and led to an oversupplied market while production levels remained steady. Additionally, the slow revival of the European economy contributed to a decline in domestic orders in the downstream market for Quicklime. Consequently, the prices of Quicklime saw a continuous decline, dropping by 1.9% in May and 12.6% in June. By the end of June 2023, the price was recorded at USD 180/MT FD Hamburg (Germany).
When compared with the previous quarter, the Quicklime market projected a downward price correction in the wake of feeble trading fundamentals. An abundant supply of product feedstock and low production costs among the local producers reduced Quicklime prices in the domestic market. In the USA, the prices of Melamine also slipped due to the high operating rates of the manufacturing units and slow demand in the market. Due to this, the revision in the price trend was observed with a reduced-price trend for overseas suppliers. However, downstream iron and steel industries operated stably with cautiously operating ventures. With surplus product availability and lower demand for new stock, producers feel pressured to clear their stock.
In Q1 2023, the regional Quicklime saw a decline in trading activities due to adequate existing stocks and feeble spot purchasing activities. Producers' efforts to preserve their margins failed to support stability in the cost trend. Supporting the bearishness in the Petroleum coke market, Quicklime production cost also tumbled, resulting in a weak price trend. Quicklime inventories in the domestic ports remain high with the feeble purchasing downstream procurements. Feeble demand from the downstream iron and steel industries has led to a decline in Quicklime. There are weak purchasing dynamics from the consumer's side as the suppliers purchase Quicklime on a need-to basis.
This quarter, the market trading activities failed to showcase bullish price trends due to limited demand and high product inventories. Trade discussions in the European Quicklime market slumped, with some participants offering negotiated levels on their contracted supply. Adequate supply continued to affect the market, declining the selling sentiment. The demand for Quicklime from the downstream iron and steel industries slumped with deterred purchasing from the end user. In the value term, trading also declined this quarter due to lower demand from the overseas market. The curbs of the supply chain and further weak cost support resulted in a Southward trajectory of the Quicklime in Germany.
