US Fumed Silica Prices Surge Amid Supply Chain Disruptions and Increased Demand

The US Fumed Silica market experienced a significant rebound in September 2024, driven by heightened demand from the construction sector and supply chain disruptions due to hurricanes and port strikes which certainly increased freight rates. Previously, the low demand from the downstream construction industry has declined the orders for Fumed Silica as US construction spending decreased by 0.1% in August 2024 compared to the same month the previous year. However, as the Federal Bank decided to cut the interest rate, the demand for Fumed Silica has certainly increased which further boosted the consumer sentiments.

Following a period of decline in the Fumed Silica market due to low construction spending, consumer sentiment has been boosted by the Federal Bank's decision to cut interest rates. As a result of declining mortgage rates and the Fed's 50 basis point rate drop, home sellers raised the number of properties they listed in September, with 11.6% more properties listed than the same month the previous year. This has led to increased demand for Fumed Silica, a crucial component in various construction applications. In response to the growing demand and supply chain challenges, major Fumed Silica producers have been expanding their production capacities. Evonik, a global leader in silica production, has announced a major expansion at its Charleston site in South Carolina. This project will increase the production capacity of precipitated silica by 50%, addressing the rising demand for green tires in the US tire industry.

Moreover, supply chain disruptions have also played a significant role in driving up prices. Hurricanes and labor disputes have disrupted transportation and logistics, leading to a shortage of shipping containers. The recent devastation caused by hurricanes and the ongoing strike at the International Longshoreman's Association (ILA) ports have disrupted transportation and logistics, leading to a shortage of shipping containers. This has resulted in increased freight rates, particularly between Europe and the US, further contributing to higher Fumed Silica prices. The combination of increased demand and supply chain disruptions has created a favorable environment for Fumed Silica producers to raise prices. As a result, the market has witnessed a significant price incline during this timeframe to settle at USD 6285/MT Fumed Silica FOB New York, USA with a monthly hike of 1.8% during September 2024.

As per ChemAnalyst, the Fumed Silica prices are expected to surge in October 2024 amid growing demand from the downstream construction industry. Moreover, the expanded production capacity of major producers like Evonik helps to meet the growing demand for Fumed Silica during this timeframe.