Hamburg (Germany): Sodium Hypochlorite prices continued to ease in the first half of April despite strong fundamentals recorded in the German economy in March after twelve months of downturns in manufacturing. High inventories and higher cost of supply continues to persist in Europe, though raw material supply issues are beginning to sort out due to newer caustic soda contract pricing. Though Nobian’s undertaking of Force Majeure on caustic soda supplies in March triggered a shortage of materials, price recovery continues to be delayed with prices bottoming out. With newer contracts for electricity supply by the industrial sector showing a significant reduction in prices and a deflationary trend in the raw material market, recovery is yet to begin in the Sodium Hypochlorite market. In this context, ChemAnalyst remains pessimistic about the recovery of prices in Q2FY24 despite strong demand from water treatment in the summer months.

Sodium Hypochlorite volumes in German markets are currently higher than the pickup in demand, owing to persistent industrial downturns, though signs of stabilization have been observed previously, in line with CEFIC figures of a 1% decline in production in FY24-25 over FY23-24 volumes. This slowdown is reflected in easing prices. With temperatures rising, civil demand for water utilities is picking up at a faster pace than industrial demand. Industrial demand still remains the largest consumer of Sodium Hypochlorite.  Previously, higher cost of electricity and renewable mandates for Chlor-Alkali industry has created significant disadvantages for pricing and costing of Sodium Hypochlorite, with cost of supply rising by 43% in FY23-24 and the gains made in FY22-23 were washed away as falling output prices and elevated supply prices generated significant downturns in Sodium Hypochlorite production. Suppliers of Sodium Hypochlorite are facing shortages of raw materials as electricity prices have continued to remain high in Europe, though newer contracts reveal that the downturn may ease by the end of the second quarter.

Prices for Sodium Hypochlorite upstream caustic soda in FY23-24 remained 22% above FY22 prices, with price acceleration not slowing significantly down in FY24-25 second quarter, largely owing to longer contract negotiations and EU mandates on renewable mix. Though FY22-23 stocking of Sodium Hypochlorite remained lower than historical consumption, markets continue to observe weak demand for Sodium Hypochlorite even in the second quarter of FY24-25 as buyers are hesitant to stock up. With German demand recovering as newer contracts of feedstock and raw materials at lower prices come into force, demand is gradually picking up with major petrochemical industries observing turnarounds. Belgium, one of the largest players in caustic soda supply, continues to observe downturns in the chlor-Alkali industry, with a 0.2% fall in chlor-alkali output prices.

Sodium Hypochlorite prices are unlikely to rebound in the short term (March-April) despite rising industrial demand. ChemAnalyst predicts prices may stabilize or even increase later in Q2 due to lower inventories. However, CEFIC’s forecast of a manufacturing downturn in FY24 clouds the outlook. To manage the current surplus, Sodium Hypochlorite suppliers are expected to further restrict supply.