German Azithromycin Market Feels Heat Amid Rising Demand, Port Congestion

The prices of Azithromycin in Germany saw a significant increase during May due to various factors, including rising demand from end-users, protracted supply chain challenges, and limited supply of the product. Additionally, market participants were eager to replenish their inventories after the first quarter of 2024, which sustained high overall demand and further contributed to the price hike of Azithromycin.

China's manufacturing sector witnessed an unprecedented slowdown in the month of May, with the official manufacturing Purchasing Managers' Index (PMI) dipping to 49.5 from 50.4 recorded in April, as per the National Bureau of Statistics (NBS). This deceleration was partially attributable to the Labor Day holidays at the beginning of the month, leading to constricted supply within the domestic market relative to the prevailing demand, consequently driving up the prices of Azithromycin. Given China's status as a major exporter of Active Pharmaceutical Ingredients (APIs), a similar trend for Azithromycin was observed in the German market.

The Eurozone economy gained momentum in May, with a notable rise in business activity and new orders recorded midway through the second quarter. This economic growth supported high overall demand for Azithromycin among end-users, driving prices up. Many businesses had reduced their inventories, anticipating weak consumer demand due to economic uncertainties. However, as consumer demand turned out to be stronger than expected, these businesses are now urgently restocking, further supporting the upward trend in Azithromycin prices. Moreover, the increasing port congestion in crucial Asian hubs, notably in China, has presented unparalleled challenges. This congestion is primarily driven by seasonal spikes in cargo volumes, especially around the Labour Day holiday, and is further aggravated by geopolitical disruptions such as the Red Sea crisis.

The situation in the Red Sea has become increasingly complicated, with recent attacks extending further offshore. Consequently, vessels are being compelled to lengthen their journeys, resulting in higher costs and longer sailing times. Many ships now take detours, adding 7-14 days to their travel time. This rerouting causes elevated port fees, congested shipping routes, and an imbalance in container supply and demand, all of which are driving up the cost of Azithromycin.

Moreover, terminals in Northern Europe have experienced line-up congestions due to a combination of adverse weather conditions and service clashes. These logistical bottlenecks have caused delays and increased shipping costs, further contributing to the rise in Azithromycin prices.

According to ChemAnalyst, the prices of Azithromycin are expected to continue rising in the coming months due to the anticipated global easing of monetary tightening, which is likely to spur demand from end-user sectors. However, this outlook is subject to several potential risks, including uncertain prospects for advanced economies, geopolitical shocks, the ongoing Middle East crisis intensifying the Red Sea situation, and deepening geo-economic fragmentation. These external factors introduce uncertainties and potential challenges that could influence the trajectory of Azithromycin prices in the near future.