Salicylic Acid Prices in Germany Set to Rise in November Due to High Demand

In November, Germany is poised to witness an increase in the prices of Salicylic Acid, driven by a surge in demand from end-users amidst limited inventories in the domestic market. Additional factors contributing to this potential rise include an upswing in feedstock prices, recent alleviation of inflationary pressures, and a deceleration in production activities, all of which may impact the Salicylic Acid market. Given its antimicrobial properties, Salicylic Acid is commonly featured in dandruff shampoos and skincare products. The upcoming winter season might lead to an augmented demand for Salicylic Acid from these sectors, potentially resulting in an upward trend in prices.

China's domestic production is encountering limitations, leading to a diminished overall supply of commodities, and potentially contributing to an increase in Salicylic Acid prices. Furthermore, a recent increase in domestic Salicylic Acid consumption, facilitated by lower interest rates and a reduction in inflationary pressures, has strengthened aggregate demand in the Chinese market, providing additional support for the upward movement in Salicylic prices. Additionally, the sluggish export of products from China to the European market could result in a shortage of Salicylic Acid in Germany, further bolstering the upward trajectory.

One of the primary factors contributing to the potential increase in prices is the upswing in phenol and sulphuric acid prices in the initial weeks of November, as these are key raw materials used in the production of Salicylic Acid. On the supply side, prices of sulfuric acid from major domestic manufacturers experienced a slight increase in early November, with manufacturers maintaining average inventory levels. Looking at the upstream industry chains, the upstream market showed a slight increase, benefiting from good cost support. In the downstream market, there was also a slight uptick, marked by strong enthusiasm among downstream customers for purchasing sulfuric acid. Similarly, the prices of phenol witnessed an increase due to an upward trend in the upstream phenol market. Major domestic factories adjusted their listing prices, positively impacting the domestic phenol market and contributing to increased mainstream transactions.

The Eurozone has recently experienced a notable easing of inflationary pressures, marking a pivotal moment in mitigating the significant inflation challenges faced by Europe's economic powerhouse since the commencement of Russia's full-scale invasion of Ukraine. The persistent inflation affecting European consumers saw a substantial decline to 2.9% in October, reaching its lowest point in over two years, driven by a drop in fuel prices and the implementation of rapid interest rate hikes by the European Central Bank. In Germany, the inflation rate, measured by the year-on-year change in the consumer price index (CPI), stood at +3.8% in October 2023, compared to +4.5% in September. This indicates a continued deceleration in the inflation rate, reaching the lowest level since August 2021. This trend could potentially revive consumer spending and contribute to an increase in Salicylic Acid prices.

ChemAnalyst forecasts indicate a sustained increase in Salicylic Acid prices in the coming months, driven by heightened demand from the healthcare and pharmaceutical industries. Additionally, anticipations of subdued trading activities may impose further constraints on the supply of Salicylic Acid in the German market, maintaining an upward trajectory in the market.