Asia’s 1-Hexene Prices Under Pressure, Stimulus to Give Limited Push for Price Recovery

The 1-Hexene market maintained a bearish trend throughout early October 2024, driven by ample supply and subdued demand from key downstream industries. Market assessments indicated adequate inventory levels at the beginning of the month, keeping prices under pressure. Spot prices of LLDPE/HDPE—major downstream applications of 1-Hexene—remained weak, reflecting sluggish domestic consumption. Despite lower demand, domestic production remained high, contributing to price stability, albeit offset by elevated freight costs.

In South Korea, maintenance activities at LLDPE/HDPE plants have been delayed, and the Producer Price Index (PPI) fell further below 100 in September as inventories reached historic highs, curbing inflationary pressures. Chinese consumers reduced 1-Hexene consumption amid lower production hours, adding to the weak demand outlook. FOB Busan prices for 1-Hexene were assessed at USD 2000/MT in the week ending October 11, 2024. 

1-Hexene supply in South Korea remained abundant, supported by lower freight costs. While Typhoon-related disruptions eased, production levels also declined due to weak demand. Imports of 1-Hexene grew year-over-year, adding cost pressure on inventories, which increased further as market demand failed to absorb the excess supply.

Chinese buyers have shifted towards South Korean suppliers, driven by geopolitical tensions between the U.S. and China, resulting in shorter delivery timelines and more competitive pricing. Raw material prices experienced a slight decline for the first time in five months, easing cost pressures for businesses. To stay competitive, some South Korean suppliers reduced their prices, indicating growing pressure to clear inventories.

Demand for 1-Hexene remained steady but unspectacular, with a reduction in the conversion of 1-Hexene into LLDPE/HDPE amid modest finished goods inventories. Factory output declined in September due to reduced working hours, limiting domestic consumption. Although the market saw mild optimism following stimulus measures, inventory levels in Nanjing and Shanghai stayed high, preventing significant upward movement in prices. Inflationary pressures eased in September, although petrochemical prices remained below 2023 levels, driven by oversupply. Export orders also weakened, influenced by geopolitical risks.

LLDPE/HDPE prices continued to decline this month, reflecting low consumption alongside the impact of rising interest rates. The overall manufacturing environment in Northeast Asia appears to be deteriorating, compounding the challenges for the 1-Hexene market. 

ChemAnalyst has revised its Q4 2024 forecast to reflect continued bearish market conditions. Overcapacity in the 1-Hexene sector is expected to persist, particularly as lower conversion rates into HDPE and other grades in China and Northeast Asia maintain downward pressure on prices. The weak performance of spot ethylene, a key feedstock for 1-Hexene, further suggests limited price recovery through October. 

U.S. deliveries of 1-Hexene from Baytown are forecasted to remain on the lower side in Q4 2024. Global demand sentiment is expected to remain muted, driven by uncertainties around the upcoming U.S. elections and cautious consumption trends across APAC and European markets. Although Chinese stimulus efforts are aimed at boosting production and reviving demand from the construction sector, their impact on the 1-Hexene market is likely to be limited.

In conclusion, the 1-Hexene market outlook for Q4 2024 remains bearish, with weak demand, high inventories, and geopolitical uncertainties shaping the market trajectory. Prices are expected to stay under pressure as global markets maintain a cautious stance. Stakeholders will need to adjust strategies to navigate this challenging environment effectively.