For the Quarter Ending September 2024
North America
Oxygen prices remained confined to a narrow range in Q3 2024, reflecting the influence of several interconnected factors. The U.S. economy displayed mixed resilience, maintaining momentum despite ongoing inflation concerns and geopolitical challenges.
Supply dynamics were influenced by consistent manufacturing output and shifting trade conditions. The Producer Price Index (PPI) for manufacturing edged down from 249.624 in Q2 to 248.383 in Q3, indicating modest cost reductions for producers. The economy benefited from inventory replenishment efforts, with GDP growth reaching 3.0% in Q2 and forecasted to rise 2.7% for the year.
Consumer and business investments, supported by the CHIPS Act and other policies, sustained demand, while inflation eased below 3.0% by July. However, risks to supply chains emerged from geopolitical tensions in Ukraine and the Middle East and the possibility of new trade tariffs. Although the Fed’s expected rate cuts aim to maintain economic growth, uncertainties in labor markets and trade policy could impact supply conditions through 2025.
Asia
In Q3 2024, the Oxygen pricing landscape in the APAC region witnessed a notable decline, with China experiencing the most significant price changes. Various factors influenced the market prices, including reduced demand from the construction and chemical industries, leading to weaker market fundamentals for manufacturers. The slowdown in real estate activities further dampened demand, exacerbating the overall decrease in prices. Weather disruptions, such as heavy rainfall and typhoons, impacted production activities, while global shipping challenges contributed to elevated transportation costs. The quarter also saw disruptions in logistics due to Typhoon Gaemi and the Dragon Boat Festival holiday. In China specifically, the pricing trend exhibited a consistent downward trajectory throughout Q3 2024. The quarter recorded a notable percentage change of -5% from the previous quarter, with a further -3% decrease noted between the first and second halves of the quarter. The quarter-ending price for Oxygen FOB Shanghai in China stood at USD 310/MT, reflecting the prevailing negative sentiment in the pricing environment.
Europe
During Q3 2024, Oxygen prices in Europe fluctuated within a narrow range, influenced by economic uncertainties linked to the ongoing conflict in West Asia and sluggish growth in both Europe and the U.S. Rising freight costs, container shortages, and logistical issues were prominent. Shipping giants such as MSC and CMA CGM raised FAK rates to as high as $6,500 per container, driven by space limitations and added operational fees. Delays due to Red Sea disruptions and Singapore port congestion further complicated the situation. Air freight rates from Northeast Asia to Europe also spiked, fueled by booming e-commerce and semiconductor demand, with spot rates rising 40% year-over-year. Despite efforts to expand capacity, the imbalance between outbound and return loads persisted. With rising geopolitical tensions and seasonal demand, freight market volatility is likely to extend into Q4. Economically, Europe experienced stagnation in Q3, as Germany’s industrial sector struggled with weak output, high energy costs, and falling exports, contributing to broader challenges across the eurozone.
For the Quarter Ending June 2024
North America
In the second quarter of 2024, the Oxygen market in the USA exhibited mixed price trends. Demand from the downstream construction sector has been moderate, contributing to a balanced market despite some price fluctuations. The steady, albeit not strong, demand from construction has played a role in maintaining a stable supply and demand equilibrium.
Manufacturing firms have operated at reduced rates during this period, reflecting a cautious approach amidst ongoing economic uncertainties. A notable development has been the decline in natural gas prices, which has significantly reduced manufacturing costs and provided some relief to producers. Recent reports indicate that natural gas prices have dropped, easing production expenses and supporting more stable pricing for Oxygen. However, the market has faced challenges due to broader economic pressures. Tight monetary policies across the USA, with the Federal Reserve maintaining the federal funds rate at 5.25%-5.50% due to persistent inflation and a tight labor market, have limited economic activity and purchasing power. This has led to more cautious procurement practices and added complexity to the market dynamics.
Overall, Q2 2024 for Oxygen in the USA has been marked by moderate construction sector demand, reduced manufacturing costs due to falling natural gas prices, and economic pressures from tight monetary policies, leading to a mixed price environment.
APAC
The second quarter of 2024 has seen a mixed trend in Oxygen pricing across the APAC region, with several compelling factors driving market dynamics. The quarter has been marked by increased production costs, primarily due to rising energy prices and logistic complications. Additionally, heightened demand from the industrial and medical sectors has contributed to the bullish market sentiment. Disruptions in the supply chain, exacerbated by adverse weather conditions and logistical hindrances, have further fueled the price surge. Notably, manufacturing activities that were temporarily halted due to maintenance shutdowns during the May Day holiday have also led to tighter supply scenarios.
China has particularly stood out in this context, experiencing the most significant price changes. The Oxygen market in China has been propelled by limited production activities and cautious restocking behavior among downstream manufacturers. Seasonality has played a crucial role, with post-holiday periods characterized by low inventory levels and moderate replenishment activities.
Overall trends reveal a correlation between increased shipping costs and higher Oxygen prices. The quarter saw an approximately 4% rise in prices from the previous quarter, underscoring a steady upward trajectory. The latest quarter-ending price for Oxygen FOB Shanghai in China is recorded at USD 335/MT, encapsulating the overall bullish pricing environment driven by supply constraints and robust downstream demand.
Europe
In the second quarter of 2024, the Oxygen market in Europe has exhibited mixed price trends. Demand from the downstream construction sector has been average, contributing to a relatively stable market despite some pricing fluctuations. The consistent, though not strong, demand from construction has helped maintain a balanced supply and demand situation.
Manufacturers have scaled back operations during this period, adopting a careful approach in response to prevailing economic uncertainties. A significant contributor to lowering production expenses has been the drop in natural gas prices, which has alleviated some of the cost burdens for producers. Nonetheless, the market has encountered difficulties due to overarching economic pressures. Stringent monetary policies in Europe, enforced by the European Central Bank to combat ongoing inflation, have constrained economic activity and diminished consumer spending power. As a result, procurement practices have become more reserved, and manufacturers have taken a more cautious stance.
In summary, Q2 2024 for Oxygen in Europe has been marked by average demand from the construction sector and reduced manufacturing costs due to falling natural gas prices. Despite these stabilizing factors, tight monetary conditions have introduced challenges, resulting in a mixed and complex market environment.
For the Quarter Ending March 2024
North America
Oxygen prices in North America during Q1 2024 showed a mixed trend with a slight upward push. Steel production maintained healthy demand, while healthcare sector fluctuations contributed to regional price variations. Scheduled maintenance at air separation units caused temporary supply constraints, impacting prices in some regions.
Natural gas price increases moderately affected production costs. In the United States, prices saw a slight uptick, driven by temporary supply constraints, while Canada's market remained stable due to steady industrial activity.
Oxygen prices for Q1 2024 remained slightly optimistic, with a quarterly increase of USD 10/MT, prices remaining rangebound in the months of the first quarter and assessed at USD 230 per MT.
Asia Pacific
In Q1 2024, the Asia Pacific oxygen market witnessed steady growth driven by increasing demand across various industries. The healthcare sector continued to be a primary consumer, with rising requirements for medical oxygen amid ongoing efforts to combat respiratory illnesses and COVID-19. Additionally, industrial applications, particularly in steel production and chemical manufacturing, contributed to the market's expansion. Market dynamics were influenced by factors such as government initiatives promoting industrial development, infrastructure projects, and healthcare infrastructure upgrades. Furthermore, the market saw strategic collaborations and investments aimed at expanding production capacities and improving distribution networks. Thus, after the conclusion of the first quarter, Oxygen prices in China were assessed at USD 350 per MT on FOB basis.
Europe
The European oxygen market in Q1 2024 remained stable, underpinned by balanced supply and demand dynamics alongside steady input costs. Industrial activity across the continent, particularly in major hubs like Germany and France, sustained consistent demand for oxygen, supporting stable pricing. Despite potential risks such as geopolitical tensions in Eastern Europe and the possibility of industrial slowdowns, the market maintained cautious optimism. Natural gas prices, a critical factor in oxygen production, remained relatively stable, minimizing cost pressures on manufacturers. Logistics and transportation disruptions were minimal, ensuring efficient oxygen supply movement within the region. However, ongoing geopolitical tensions and the possibility of industrial slowdowns warrant close monitoring in the coming months to anticipate any potential market shifts.
