Intense Competition Drive Fumed Silica Prices Down in China During August 2024

The Fumed Silica market in China witnessed a downward price trend during August 2024, despite the disruptions caused by heavy rainfall. This decline was primarily attributed to a weakened downstream construction industry and intensified market competition. Manufacturers' aggressive pricing strategies and the stable supply of downstream thermal coal further reinforced the downward pressure on Fumed Silica prices.

The construction sector, a significant consumer of Fumed Silica, experienced a decrease in demand due to the slowdown in project activities. This reduced demand, coupled with relatively stable cement prices, further pressured Fumed Silica prices. While infrastructure projects in the province gradually resumed, the high inventories held by some manufacturers and fierce price competition among companies hindered any substantial price increases in the Fumed Silica market. In addition to the construction industry dynamics, the weak and downward trend in the thermal coal market also influenced Fumed Silica prices. The continued normal production of coal mines and the completion of monthly tasks by some maintained a steady supply, limiting potential price increases during this period. The declining sales volume of the top 100 real estate companies and the reduced concentration of special bond issuance have further exacerbated the demand-side challenges. Henceforth, several manufacturers intensified market competition by offering promotional discounts to stimulate sales and gain market share in the challenging environment. This aggressive pricing strategy due to declining property values further contributed to the downward pressure on Fumed Silica prices to settle at USD 4835/MT Fumed Silica FOB Shanghai, China with a monthly drop of 1% during August 2024.

However, the impact of heavy rainfall on the Fumed Silica market somewhat affected the market sentiments. While the rainfall disrupted production and transportation activities in some regions, it also affected the downstream construction industry. To mitigate some supply-side constraints, merchants have been urged to easily destock their stocks by the different levels of production resumption. The overall volume of cement exported reduced the burden on the supply. The statistics showed that stockpiles of rebar and cement were well-liquidated, especially in East, North, and Southwest China as several cement kiln lines began operating at a faster pace as well.

As per ChemAnalyst, the Fumed Silica market in China is expected to decline further in September 2024 due expected decrease in the demand for the downstream construction sector from the overseas market. Moreover, ample inventories of Fumed Silica might lower the prices of the commodity in the upcoming month.