US Sodium Lignosulphonate Prices Hit a Low in Early July Amid Diminished Demand

In early July 2024, the Sodium Lignosulphonate market in the USA experienced a downturn, with prices dropping by 2%. This decline was primarily driven by inadequate support from Sodium Lignosulphonate downstream demand. Notably, during the week ending July 5th, the cost of feedstock, Sodium Hydroxide decreased by 4% within the US market, contributing to overall reduced production costs for Sodium Lignosulphonate.

The construction sector, a major consumer of Sodium Lignosulphonate, faced weakened demand due to sluggish activity compounded by a downturn in housing sales, high interest rates, and low consumer confidence. These factors converged to stifle construction projects across the country. Recent reports highlighted that persistently high interest rates, expected to remain elevated longer than previously anticipated, have notably dampened sentiment among American homebuilders. According to the National Association of Home Builders/Wells Fargo Housing Market Index, sentiment declined for the second consecutive month in May. This shift has translated into tangible declines in housing starts, which fell by 5.5% to a seasonally adjusted annual rate of 1.28 million units, marking the lowest level since 2020 and falling short of economists’ forecasts. Building permits, a forward-looking indicator, also dropped by 3.8%, signaling further challenges ahead. Additionally, new home sales plummeted by 11.3% to a seasonally adjusted annual rate of 619,000 units in May, underscoring broader market struggles that have influenced Sodium Lignosulphonate prices.

Consumer confidence mirrored these economic pressures, dipping by 0.9 points to 100.4 in June. While there was some improvement in current conditions, the outlook for income, business conditions, and the labor market deteriorated, leading to historically low intentions for home purchases, which in turn impacted Sodium Lignosulphonate prices. The reduced construction activity and lower housing starts further decreased the demand for Sodium Lignosulphonate, an essential additive in the building sector. Meanwhile, the Federal Reserve continued its efforts to rein in inflation toward its 2% target but maintained its key policy rate between 5.25% and 5.5%, the highest in over two decades. Federal Reserve Chair Jerome Powell indicated cautious optimism regarding inflation trends, suggesting a potential downward trajectory but emphasizing the need for more data before considering rate adjustments.

In addition, globally, logistical challenges persisted, driven by increased ocean freight rates impacting routes between China and North America. Costs surged by 10.3% on the west coast route and by 6% on the east coast, underscoring additional cost pressures. Domestically, the Panama Canal Authority implemented measures from June 26 to ease congestion, including raising the maximum authorized draught and introducing new booking slots for Neopanamax locks. These adjustments aimed to enhance scheduling flexibility and reduce delays, benefiting global trade flows, especially in the Red Sea region, and contributed to the relaxation of Sodium Lignosulphonate prices.

In conclusion, the Sodium Lignosulphonate market in the USA encountered complex challenges in early July 2024 and is expected to persist in the coming week. This includes low demand from downstream sectors and the availability of Sodium Lignosulphonate at lower prices in the Asian market, as anticipated by analysts.