Supply Challenges Minimal as Sodium Hypochlorite Demand Slows in German Market

Hamburg (Germany): Sodium Hypochlorite prices continue to ease in March 24 despite the strong fundamentals recorded in the German economy in February after eleven months of downturns in manufacturing. This is also in line with the long-term historical trend, which reflects a slowdown in demand for Sodium Hypochlorite in German markets, and destocking is anticipated throughout FY24 at regular intervals, even if Germany’s manufacturing improves.

Supply challenges remain minimal for Sodium Hypochlorite for German suppliers as the industry is largely domestic to Europe. In this context, ChemAnalyst remains pessimistic about the recovery of prices in Q2FY24 despite strong demand from water treatment in the summer months. Sodium Hypochlorite volumes in German markets are expected to slow down in FY24, primarily by 2 to 3% YoY.

 This slowdown is reflected in easing prices, despite the demand for Sodium Hypochlorite remaining stable in the month of March. With temperatures rising, civil demand for water utilities is picking up at a faster pace than industrial demand, though an uptick in industrial demand is recorded. Suppliers of Sodium Hypochlorite continue to observe higher orders of Sodium Hypochlorite from both domestic and export markets.

ChemAnalyst Research on pricing movements reveals that FY23 saw a domestic market tightening of Sodium Hypochlorite with reduced supply for both external and domestic markets. FY23 saw severe downturns across Sodium Hypochlorite production in Germany, with high energy costs continuing to be the main culprit of severe supply crunch. Prices for FY23 remained 18% above FY22 prices, with price acceleration not slowing down in FY23, largely owing to industrial downturns.

Stockpiles of Sodium Hypochlorite in the German markets continue to provide negative inventory pressure in FY24. With German demand recovering as newer contracts at lower prices come into force, demand is gradually picking up, with major petrochemical industries observing turnarounds in cracker margins. Sodium Hypochlorite suppliers are destocking and reducing production further as supply continues to outstretch demand in the present quarter.

This is leading to strong price de-acceleration with suppliers of Sodium Hypochlorite exporting higher volumes YoY basis to Italy, France, and Austria due to collective recovery in industrial performance. This recovery is currently driving a reduction in stockpiles of Sodium Hypochlorite while newer supply at negative cost pressures into the supply is further reducing the cost of supply with price aggregates falling further.

Recent news of Nobian declaring force majeure on feedstock caustic soda supplies in Germany attests the supplier's intent to reduce the price fall for Sodium Hypochlorite and other derivatives. ChemAnalyst remains pessimistic about Sodium Hypochlorite’s recovery of prices in March and April, while flattening of prices and subsequent recoveries are expected by the end of Q2FY24 as inventory pressure develops as industrial demand consistently outpaces previous gains. This still remains to be seen as CEFIC predicts FY24 to be a downturn for manufacturing and industrial performance. Suppliers of Sodium Hypochlorite are expected to tighten the supply further.