1-Hexene Prices in US Stabilizes after Hurricane Beryl Amidst Lower Shipping Demand

1-Hexene prices in US stabilize in the third week of July, two weeks after Hurricane Beryl made landfall in Texas. This stabilization was primarily supported as a result of factory closures and delays following Hurricane Beryl, shipping brokers said on Wednesday. US EIA reported the continuous rise in raw material ethane prices since the past three weeks, with the week ending on 17^th July adding to the premium to gas going up by 33%.

Hurricane Beryl, which made landfall on 8^th July 2024, previously made the ethylene producers to undertake strong inventory buildup as ethylene as well as downstream 1-Hexene production both remained strong. However, major production and loading of ships were largely made for offline sales with domestic inventories remaining relatively weaker. Chemical oil tankers, which are used to transport 1-Hexene, remained relatively stable in the previous month indicating lower volumes being transported between Asia-US route, however, LLDPE and HDPE, downstream of 1-Hexene, resins continue to be loaded in high volumes for trans-pacific trade, revealed a market participant. Freightos US-East coast to Asian prices peaked to as high as USD 9600/FEU the previous week. High conversion of ethane to LLDPE and HDPE in US East coast continues, lifting up sentiments for 1-Hexene. The prices of chemical tankers for transferring 1-Hexene and other liquid petrochemicals plunged on US-Asia route in the third week of July.

A market participant from China, revealed that intense weather, flooding in Eastern provinces of Zhejiang, Fujian and Henan has disrupted supply chain and many crackers have come offline. The latest report of cracker PetroChina Lanzhou going offline further added to the worry. However, American experts argue that overstocking and high stocks of China has forced China to keep excess supply offline. 1-Hexene import demand of China and NE Asia from US markets have slowed down, as regional stocks for the time being have been assessed to be strong to handle the typhoon season in the Pacific.

Upstream ethylene markets in US have remained tight due to scheduled deliveries for Asia bound LLDPE and HDPE resins. Recent developments of inflation easing, has led to speculation across US markets of consumption driven growth for Q3 and Q4 is expected, a part of high demand for 1-Hexene and ethylene for the coming consumption is expected to keep higher conversion ratios of gas to petrochemicals. Downstream LLDPE and HDPE prices have remained up consistently by 5% over the early days of May despite higher conversion of ethylene to 1-Hexene and the PE resins continued throughout the second quarter. Fewer contracts of 1-Hexene were put on re-sale for deliveries of June and July as both the domestic as well as external markets remained optimistic of recovery in H2 2024.

ChemAnalyst forecast for moderate gains in prices of 1-Hexene for July and August as sufficient contract orders of significant volumes remained intact. With positive news of consumption driven growth, based on data of US government and US going for elections in November, overall price expectations despite easing of import demand remained bullish.