Inadequate Demand From the Downstream Sector Decelerate the Price Trends of Calcium Carbide

Hamburg, Germany: The decline in demand from the construction sector has been imposing downside risks on the price realizations of several bulk chemicals, including Calcium Carbide. Throughout the second quarter of 2023, the prices of Calcium Carbide have remained on the lower end amid a fall in procurement from the downstream PVC industries. In addition, despite successive interest rate hikes by European Central Bank, inflationary pressures have persisted in the German domestic market. The high inflationary has been deteriorating the purchasing power of the end-use industries, weakening the market growth of Calcium Carbide.

As per the Federal Statistics Office (Destatis), Germany's housing crisis is projected to intensify, with the number of building permits for dwellings collapsing by 25.9 percent year-on-year in May. Foreseeing the drop in new projects, the manufacturers have avoided the bulk procurement of raw materials such as Calcium Carbide required in construction industries. On the other hand, the demand for Calcium Carbide from the PVC industries has also remained lackluster as the buyers were more inclined towards cheap supplies from the Asian market. The manufacturers have also avoided fresh production amid high Calcium Carbide manufacturing costs and increased their dependence on imports. Therefore, In order to revive the German housing sector, Tim-Oliver Mueller, head of the German Construction Industry Federation, emphasized an emergency package of measures that would also include the reduced-price sale of public land for new projects.

Furthermore, after four months of successive decrements, the inflation has climbed up in Q2-end, undermining the market sentiments of Calcium Carbide manufacturing firms. The European Central Bank (ECB) has mounted interest rates to an unprecedented 4% in a bid to dampen spending and thus reduce inflation. On the other hand,  Water levels on the river Rhine in Germany have soared sharply after heavy rain in southern regions but are still too narrow in northern areas for cargo vessels to sail fully loaded. As per the market participants, due to Dry weather in June, the river became shallow for vessels to sail fully loaded, and vessel operators imposed surcharges on freight rates to compensate for vessels sailing partially vacant, expanding costs for cargo owners.

As per the pricing intelligence of ChemAnalyst, the prices of Calcium Carbide are anticipated to witness a bearish run in the coming week in the wake of moderate demand fundamentals from the downstream construction industries. The erosion of Germany's Calcium Carbide industrial fundamentals will substantially impact the rest of the European countries as  Germany is not just Europe's biggest economy; it also functions as a fulcrum, coupling the region's diverse economies as the largest trading partner and investor.