Demand has remained soft in April, a situation that persists since March, and which has brought the market into balance. There are a multitude of factors that can explain the lower demand.
A major factor has been the increase in prices that has likely fuelled destocking. The sudden jump in prices has most probably influenced many buyers to buy minimum quantities. This strategy was probably reinforced by the better availability and by the retreat in gas prices which raised expectations of lower costs or reinforced the view that prices were unlikely to continue to increase in May.
Demand is also softer than it should be because the ongoing supply chain problems are still impacting production in some downstream markets, such as automotive. The latest data indeed confirms a struggling automotive sector. Another negative reading has been the slump in consumer confidence.
However, some sectors were still performing well, such as construction and the industrial sector, both showing growth compared to last year. Despite the positive readings, there is little doubt that demand has decreased in April. But part of this slowdown is indeed to do with destocking, it is plausible to assume that in May there could be some rebound.
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