US Fumed Silica Market Declines Amidst Drop in Demand in May 2024

The US market for Fumed Silica, a critical material in construction, faced a price downturn in May 2024. This decline has sent ripples through the construction sector and has the potential to impact the broader US economy. The primary reason behind the price drop was the sluggish performance of the downstream construction sector. Homebuilders across the country were facing consistent pressure, with demand for Fumed Silica remaining subdued which was largely attributed to the persistent rise in interest rates. The Federal Reserve's interest rate hikes have made it more expensive for consumers to borrow money for new homes. This not only directly reduces consumer purchasing power but also creates a ripple effect. Rising interest rates foster general economic anxieties, leading to a wait-and-see approach from potential homebuyers. This overall lack of confidence further weakens the demand for Fumed Silica, a key component in construction materials.

As per the recent assessment, the Fumed Silica market in the USA has experienced a consecutive decline to settle at USD 6050/MT FOB New York during May 2024. Soaring inflation levels across the US market have eroded consumer purchasing power. This translates to a reduced ability and willingness to invest in new homes, further dampening demand. The National Association of Realtors reported a second consecutive month of decline in sales despite a two-year high in inventory, indicating a lack of demand even with available properties. Adding to the downward pressure on prices are the high port stocks of Fumed Silica. With existing stockpiles and a significant drop in demand, a natural market correction has occurred. Fumed Silica has applications in various sectors, including paints, coatings, and electronics. A prolonged price slump could potentially impact the profitability of companies that rely on Fumed Silica in their manufacturing processes.

Furthermore, advantageous economic circumstances resulted in reduced freight expenses for exporting Fumed Silica from the United States to Asia, with shipping costs falling by 13% in May 2024. This could suggest that the US has more production capability, which would increase the easily available stocks. After showing signs of improvement in April, the US manufacturing index jumped in May, reflecting a little improvement in the manufacturing sector's health. In May, manufacturers maintained a steady pace of production expansion, but at a slower growth rate than in April. As per ChemAnalyst, the Fumed Silica market is expected to rebound during May during the summer driving season as the demand for construction projects usually ramps up during this timeframe.