Subdued Construction Industry Compels VAE RD Powder Prices To Depreciate Across Europe

Hamburg, Germany: Prices of Vinyl Acetate Elastomer Redispersible (VAE RD Powder) have depreciated by almost 1% across Europe because of depreciating prices of feedstock Vinyl Acetate Monomer (VAM) by more than 4% despite prices of upstream Crude Oil appreciating by more than 11% in the first half of September.

Deterioration of the construction industry across Germany and Europe amidst weaker economic conditions has had a detrimental impact on the demand for VAE RD Powder. Investments in construction continue to be low for the seventh straight consecutive as demand from the downstream cement sector continues to abate. Manufacturers of cement, bricks, and concrete have started to face declining orders of inventories as the construction sector continues to perform poorly, not only in Germany but across the rest of Europe, further declining the demand for VAE RD Powder. Building material suppliers have faced high depreciations in the new orders of inventories (including VAE RD Powder), declining by almost 15% in Germany, almost 12% in the Netherlands, and almost 14% in Austria in August on a month-on-month basis with further depreciations being likely expected in September.

Furthermore, disruptions being recorded in the current supply chain system have cast a negative outlook on the procurement activities amongst leading contractors based across Europe. With Germany’s current railroad system being largely underfunded and suffering from a shortage of staff, key players in the cement industry agonize about the transportation of raw materials and finished products. This has led to longer lead times, which further project a negative outlook on the construction industry where VAE RD Powder is generally used as an additive.

The magnitude of the decline of the prices of VAE RD Powder is recorded to be marginal due to a marginal demand being recorded from the non-residential sector due to increased E-Commerce activities, which has necessitated the requirement of new logistic centers and warehouses and has led to the issuance of new permits. Likewise, government expenditure on schools has also stabilized, which has prevented the prices of VAE RD Powder from witnessing a sharp bearish situation in the European Market.

Overall, the market situation for VAE RD Powder largely depends on the performance of the construction industry, particularly in the cement subsector. As of now, prices of VAE RD Powder continue to witness a bearish market situation as recessionary conditions prevail across Europe, with trade activities being modest. But if the performance of the construction industry improves in the latter half of September, then a bullish market will be observed, which would complement the current improvements being made in the supply chain system.