Bearish Trend Hits Meta-Xylene Prices in North American Prices, European Market Experiences Stagnancy

Meta-xylene (m-xylene) prices have witnessed a bearish rally across the North American market during the fourth week of September 2023 owing to weak feedstock prices. The moderate downstream demand coupled with sufficient supply in the regional market has further weighed down the prices of m-xylene. However, m-xylene prices have shown downward stagnancy in the European market amid stable feedstock prices.

According to ChemAnalyst's latest database, the prices of m-xylene have inched lower in the US market. Despite the high upstream Naphtha prices, feedstock Mixed Xylene prices have decreased amid weak demand from other end-user sectors, resulting in the domestic market's low production cost of m-xylene. Market players reported feedstock Mixed Xylene prices have temporarily declined in the domestic market. However, it is anticipated to increase in the upcoming weeks, which will positively impact the prices of m-xylene. Furthermore, macroeconomic challenges such as spiraling inflationary pressure and high interest rates have eroded consumer sentiments.

Meanwhile, demand for m-xylene from the downstream Isophthalic acid has been steady as consumption from the end-user PET sector has slowed amid a ban on plastic in the domestic market. The spot transactions were also average, as the enthusiasm of terminal firm to enter the market were not strong. Thus, in order to stimulate more sales, manufacturers or traders kept m-xylene prices at a low level. On the supply side, the manufacturing firms were operating at low rates as demand from the downstream industry had not fully recovered in the domestic market. Additionally, as per the market sources, the US Purchasing Manager's Index remained in the contraction zone in September (i.e., below 50), reflecting a deterioration in manufacturing and industrial activity. Despite the supply chain woes brought on by the Hurricane and the Panama Canal drought, the inventories were sufficient due to a decline in new orders, which further supported the prices to follow a downtrend in the domestic market.

Conversely, m-xylene prices have showcased stagnancy with a marginal decrement in Europe's largest economy, Germany. The cost pressure from feedstock Mixed Xylene was limited as its prices remained stagnant, and it was insufficient to drive the price of m-xylene to the higher side. The pace of inquiries originating from the downstream Isophthalic acid has tepid amid firm inflationary pressure and elevated interest rates, dampening consumers' buying sentiments. The ifo Business Climate Index was slightly down from 85.8 in August to 85.7 in September, reflecting a deterioration in Business sentiment among manufacturing companies in the German market. Market players reported the operating rates were reduced as manufacturers were tentative about building up the excessive inventories in the domestic market. However, the material availability was sufficient to cater to overall downstream demand. Therefore, the positive development of m-xylene was subdued, and m-xylene prices operated at a low level.

As per the ChemAnalyst anticipation, the prices of m-xylene are anticipated to increase in the US and European markets due to further expectation of a rise in feedstock Mixed Xylene prices amid high upstream prices. Although demand from the downstream Isophthalic acid industry is likely to improve but at a slower pace.