Constrained Downstream Demand Weighs Down the Global Mixed Xylene Prices

Mixed Xylene prices have inched lower across the global market during the last week of June 2023, supported by weak feedstock prices and limited downstream demand. The volatile energy prices, sufficient stock, and slow Chinese economic recovery have supported the downshift in the prices of Mixed Xylene. On the other side, the mounting inflation rates and consequent rise in interest rates to contain it had a heavy toll on the demand fundamentals.

Prices of Mixed Xylene have dropped in the Chinese market owing to weak cost pressure from the feedstock Naphtha. The procurements from the downstream xylene value chain (m-Xylene, p-Xylene, o-Xylene) and the gasoline industry have softened, decreasing consumption rates. Furthermore, Fuhaichuang Petroleum and Petrochemical in Fujian, China, and Sinopec Hainan Petrochemical in Yangpu, China, have closed their p-Xylene plant amid maintenance turnaround, which further causes weak operating rates and sluggish demand for Mixed Xylene. Thus, Mixed Xylene Ex-Qingdao prices were assessed at USD 1017/MT with a week-on-week decrement of 1.5% during the week ending 30th June 2023.

On the other side, the European economy has been slowing down in recent months, which has led to a decline in demand for Mixed Xylene. The cost pressure from feedstock Naphtha was constrained as Naphtha prices reached a 2-year low, reported by market participants. Although, on the energy front, crude oil prices have slightly improved amid increased consumption from the end-user industry. The Brent crude oil prices were settled at $ 75.41/barrel with a week-on-week increment of 1.9% on 30th June. However, it had a limited impact on the prices of the downstream Mixed Xylene industry. In addition, the inquiries of Mixed Xylene from the p-Xylene, m-Xylene, and o-Xylene sectors have subdued amid sluggish buying trends among the end-users. The market transactions were mostly based on immediate requirements reported by market participants. In addition, sentiments in Europe's biggest economy, Germany's chemical industry, dropped significantly in June. As difficult macroeconomic circumstances weighed on the chemical industry, the ifo business climate index decreased from 91.5 points to 88.5 points in June. As a result, Mixed Xylene FOB Hamburg prices were settled at USD 995/MT with a weekly decrement of USD 15/MT during the same time frame.

Similarly, due to the weak cost pressure from the feedstock Naphtha, Mixed Xylene prices have decreased by 1.6% in the US market. However, upstream WTI crude oil prices have risen as crude inventories have dropped in the given time frame. American Petroleum Institute data reported that crude oil inventories in the United States decreased this week by 4.382 million barrels after descending by 2.408 million in the previous week. In addition, the demand from the downstream xylene value chain and gasoline industry has been slower than expected amid slow consumption from the end-user. As per the sources, gasoline inventories escalated by 1.615 million barrels, nearly undoing the 2.85-million-barrel dip in the week preceding; thus, consumption of Mixed Xylene has decreased. Further, the material availability remained sufficient, which promoted the manufacturers to operate their prices at a low- level.

ChemAnalyst anticipated Mixed Xylene prices are likely to increase due to further expectations of a rise in demand from the downstream industries in the backdrop of seasonal demand. The feedstock Naphtha prices may increase as global crude oil prices will upsurge due to high demand and supply shortage, which might positively impact the Mixed Xylene prices.