The broader European chemical industry is facing a perfect storm of challenges. Soaring energy costs because of the energy crisis in Europe, have significantly increased production costs for their manufacturers. This, coupled with a slowing European economy has dampened the demand for chemical products like Phosphonate in the region.

Key Takeaways:

• Phosphonate prices remained stable in Germany despite a contracting manufacturing sector.
• Phosphonate demand remained relatively weak due to limited consumption in industrial applications.
• German manufacturing sector outlook remains uncertain, which could impact demand for Phosphonate in the coming months.

Phosphonate prices remained stable in Germany during the first half of January despite a contracting manufacturing sector and broader challenges facing the European chemical industry. Phosphonate market in Germany defied the prevailing economic gloom in January, remaining stable despite a sharp contraction in the manufacturing sector. This resilience in demand for the key chemical occurred amidst a challenging backdrop for the European chemical industry, plagued by rising energy costs, sluggish growth, and intense competition from global rivals.

The German manufacturing sector experienced a significant downturn in December 2024, with the manufacturing activities plummeting further to new lows. This decline was primarily driven by a sharp drop in output and new orders, reflecting weak demand for Phosphonate in the region.

The German Association of the Chemicals Industry (VCI) recently released a report highlighting that the hoped-for recovery in demand for chemical products had failed to materialize. The association now expects industry sales to decline by 2% for the entire year.

According to the ChemAnalyst database, this uncertainty will prevail in the first quarter of 2025 as well. Continued weakness in industrial activity, coupled with political uncertainty and economic concerns, could further dampen overall demand.

However, a stable price trend was observed in January. This suggests that the demand for Phosphonate may gain growth, despite the challenging macroeconomic environment and the broader struggles of the European chemical industry.

Europe imports majority of its chemicals like Phosphonate from lower-cost producers in the US, China, and the Middle East. But, demand of Phosphonate in these countries – especially in China increased as well due to Lunar New Year, which led to a marginal increase in import prices in Hamburg. Phosphonate ATMP CFR Hamburg saw a marginal increase of 2.7% in late December.

Globally, Procurement activity for Phosphonate has also increased moderately in early January, indicating slightly improved end-user demand. This slim demand can be attributed to the critical role of Phosphonate in various industrial applications like water treatment, oil and gas production, and metal processing.