US Calcium Chloride Market Faces a Bearish Trend Amid Adequate Inventories and Weak Demand

Texas (USA)- This month, the Calcium Chloride market experienced a bearish trend due to adequate inventories meeting downstream demand. Terminal market consumption was average, and downstream purchasing enthusiasm remained weak, leading to constrained enterprise shipments and increased Calcium Chloride inventory levels. To stimulate downstream participation, factory quotations were continuously lowered, but sluggish downstream consumption and insufficient demand support contributed to weak Calcium Chloride prices.

Domestic Calcium Chloride plants are currently operating at peak efficiency to fulfill both local and global downstream demand. Moreover, the Calcium Chloride feedstock calcium carbonate market has experienced fluctuations, impacting the final production cost. The downstream procurement sentiment for Calcium Chloride remained average, focusing mainly on essential purchases, which led to a weakening Calcium Chloride market atmosphere. The US PMI value as of this week has shown a lower value in comparison to the value in the previous month indicating contraction in the manufacturing sector which is aligned with lower demand trends of Calcium Chloride.

US natural gas as updated weather forecasts pointed to hotter temperatures this summer, potentially leading to increased electricity demand. This surge in demand is exacerbated by producers who cut drilling budgets and reduced output earlier this year when prices were at record lows. The surplus of natural gas from the unusually warm winter has significantly decreased, easing concerns about storage capacity. Meanwhile, the North American Electric Reliability Council's annual report underscores elevated risks of energy shortages in Texas, New England, the Southwest, the upper Midwest, British Columbia, and Saskatchewan if temperatures rise above expectations.

The Calcium Chloride demand from the primarily used in the construction sector was firm. Total construction starts rose in May, with non-residential building starts gaining, non-building starts higher, while residential starts slipped 1%. On a year-to-date basis through April, total construction starts were up 13% from the first four months of 2023. Residential starts were up 22%, non-building starts gained 14%, and non-residential building starts rose 5%.

The recent softer tone in economic data has bolstered investor expectations that the Federal Reserve might start lowering interest rates about three months from now.

According to ChemAnalyst, rising freight costs at the start of the peak shipping season may lead to higher production costs being passed on to consumer prices, complicating the Federal Reserve's goal of reducing inflation to 2% and potentially delaying rate cuts. This is expected to impact overall input costs. Consequently, the price of Calcium Chloride is likely to remain bearish in the coming weeks due to weak demand from the downstream construction industry, resulting in lower Calcium Chloride inquiries and subdued demand conditions.