Uncertain Economic Activity Dampens the Demand for Neopentyl Glycol

The price of Neopentyl Glycol remained declining in the German market throughout the last month of the second quarter. Neopentyl Glycol is widely used in major industries such as construction, automotive, electronics, etc.

The feedstock Formaldehyde remained weak by 3.5% at the end of the second quarter, which helped to produce Neopentyl Glycol at a lower price in the German market. Further, the deterioration in the construction industry decreased the consumption of Neopentyl Glycol in the paint and coating manufacturing sector. In addition, supply chains across the Eurozone region saw a striking improvement toward the end of the second quarter.

At the end of the second quarter, the German economy lost a significant amount of momentum due to weakening demand conditions and a corresponding slowdown in the expansion of economic activity. In the manufacturing sector, where order books for Neopentyl Glycol amid signs of customer hesitation and destocking remained the key area of weakness.

Business conditions across the German construction industry again worsened in June 2023 due to the high interest and tight financial conditions, all attributed to dampening the demand for paint & coating, and other construction materials.

Enterprises have cut their procurement activities sharply, which showed the greatest decline in June 2023; as businesses adjusted to reduced workloads and the possibility of a prolonged demand slowdown, employment in the construction industry decreased in June for the fifteenth consecutive month.

The recent construction Purchasing Manager’s Index (PMI) data showed a decline from May 43.9 points to 41.4 points in June, indicating the slump in construction activities ultimately affected the Neopentyl Glycol market across the Eurozone’s largest economy. The construction companies are pessimistic about this year for drop-in activity due to rising interest rates for construction materials and general hesitancy in the country.

As per ChemAnalyst, the price of Neopentyl Glycol was settled at USD 1886/MT on a FOB Hamburg basis at the end of the second quarter of 2023.

Activity in the German construction industry was poor due to the weak demand situation across the region. The demand for Neopentyl Glycol is likely to be weak in the paint & coating industry if the construction industry remains to deteriorate in the largest economy of the Eurozone. Market participants say nothing to suggest that the situation will improve shortly. Further, traders are nevertheless uncertain whether the European Central Bank (ECB) will raise interest rates once or even more times. The Neopentyl Glycol market declined by 2% in June 2023 at the largest economy of the Eurozone.