Gelatin Prices Show Bearish Trend in Europe Amidst Economic Downturns

Prices for Gelatin fell in the European region due to an economic slump in the manufacturing sector, with a decline in end-user demand. The Eurozone's largest economy was pulled down by weak spending power, inflationary pressure, and low manufacturing order books. In response to high inflation, the European Central Bank (ECB) raised the key policy interest rate by 25 basis points for the ninth time in a row, bringing the main rate to 3.75%. This contributed to a decrease in demand for Gelatin in the European market.

Germany, the largest economy in Europe, is experiencing major challenges as it continues to struggle. Manufacturers in Germany are being crippled by the country's ongoing energy crisis, which is a result of the conflict in Ukraine, at a time when the economy is already contending with a skills shortage and low productivity.

The German PMI (Purchasing Managers' Index) decreased to 41 in July from 43.6 in the prior month, which is the lowest level in 38 months. Since the PMI is below 50, it means that the manufacturing sector has gotten worse because of a decline in new orders, factory gate prices, input costs, and output prices. The drop in demand for Gelatin can be ascribed to several factors, including customer hesitancy, destocking, and rising interest rates. The economic and geopolitical uncertainty amid tightened market conditions also decreased Gelatin's demand. Additionally, there was a decrease in the export of goods to other countries, which increased the supply of Gelatin in the domestic market and caused prices to drop even further.

A similar downward trend in Gelatin prices is noticed in Brazil. The Gelatin prices declined in Brazil because of lower consumer confidence amid sufficient inventory levels among market participants. Manufacturing activity fell due to lower purchasing activity and inquiries for new orders from the domestic and international markets. The Brazil Manufacturing PMI increased to 47.8 in July from 46.6 in the previous month. It marked the ninth consecutive month of decline in Brazilian factory activity, although the pace of decline was the slowest in five months. The rate of new orders and output declined amid subdued demand, although the declines were moderate and at the slowest pace since February, supporting the downward trajectory of Gelatin prices.

As per the ChemAnalyst analysis, Gelatin prices might remain under pressure in the coming months due to consistent lowering demand from end-sectors due to stubborn inflation and expected rate hikes by the ECB. Furthermore, falling export sales amid reduced demand for Gelatin from the international market will further weigh on the market.