Fumed Silica Market in Japan Remains steady in February, Outlook looks Bullish Amidst New Construction Projects

In February 2024, the Japanese market for Fumed Silica remained unchanged, continuing the prior pattern with subdued downstream construction performance and low-key orders from the market. However, there is a potential rebound in the construction sector, initially anticipated for 2024, faces a new challenge, a looming labor shortage due to an upcoming cap on overtime hours. The government is actively working on a solution package to mitigate this impact and support the industry's progress. Moreover, government investments in infrastructure projects for the 2025 World Exposition in Osaka, coupled with a rise in private building investments, are expected to propel Japan's construction industry by 0.9% in 2024. This growth surge could translate into a significant increase in new orders for Fumed Silica, potentially impacting price stability in the future.

The market continues to experience a period of equilibrium between supply and demand, resulting in stable prices for Fumed Silica during February to settle at USD 5694/MT FOB Tokyo, Japan Fumed Silica. Despite ongoing factory activity decline, supply chains functioned effectively, ensuring a steady flow of the material and preventing price hikes due to shortages. Persistent manufacturing slowdown plays a pivotal role in the unchanged market dynamics for Fumed Silica as this stability comes at the cost of sluggish market activity. Unrevised data reveals a stagnant Japan Manufacturing PMI in February, marking the ninth consecutive month of decline in factory activity. This slowdown has contributed to the balanced market, where supply keeps pace with the lackluster demand.

Previously, the Japanese Statistics Bureau reports revealed a positive trend in private building investments during the first three quarters of 2023. The overall value climbed by 4.8%, with increases in both residential (1.5%) and non-residential (5.5%) structures. This indicates a strong foundation for future growth in the construction sector, which is a major consumer of Fumed Silica.

As per ChemAnalyst, the Fumed Silica market is expected to showcase a bullish trend as the construction industry is facing a new obstacle because of an impending labor crisis. The government is working hard to provide a package of solutions to lessen the effects and encourage the development of the sector. To enhance workers' working conditions, the Japanese government and organizations representing the construction industry decided to target paying sector employees more than 5% more in the fiscal year that begins the next month. This could surge the downstream construction sector and boost the enthusiasm in the Fumed Silica market in the upcoming months. The anticipated rebound in the construction industry, fueled by government investments and past growth trends, could significantly impact Fumed Silica demand and prices.