Cyclohexane Price Plummets in July 2023: Weak Downstream Industries Continue to Impact Market

Germany: The price of Cyclohexane plummeted in July 2023, and it continued to extend the first week of August 2023 due to the weak performance of downstream coating and solvents industries. According to ChemAnalyst data, the cost of Cyclohexane hovered around USD 1330/MT on a FOB Nuremberg basis with a weekly declination of 0.7% during the week ending on 04th August 2023.

In July, a decline in manufacturing and a continued slowdown in growth in service activity caused the German economy to shrink. Meanwhile, for the first time this year, business forecasts for future activity turned negative, reflected in a job creation slowdown from the robust rates witnessed in the second quarter.

In July, businesses continued to reduce their backlogs of unfinished work due to a lack of new business. In addition, the decline was occurring at the fastest rate in more than three years. In turn, a declining flow of unfinished work caused a downturn in firms' expectations for future activity, which took a negative turn as pessimists overtook optimists for the first time since December last year. According to the industry, the cautious optimism among service companies that was present in June gave way to a small pessimism about the future, while the outlook for manufacturing grew even gloomier. Manufacturers of Cyclohexane derivatives experienced Cyclohexane discounts due to supply chain improvements and reduced demand.

Even though overall pricing pressure for Cyclohexane continued to ease in July, there were once more divergent trends at the sector level. Input cost inflation continued its downward trend, which began in October of last year, and it now stands at its lowest level in almost three years. The effect, however, was caused by a sudden and quick decline in manufacturer purchasing prices. The likelihood of the downturn intensifying in the coming months and leading businesses to reduce hiring is also indicated by deteriorating forward-looking indicators like future output forecasts and new order inflows. Over the past seven days, the construction industry has not moved much and remained flat, indicating that the consumption of paint and coating saw a sluggish pattern. Ultimately the demand for Cyclohexane remained weak in the German market.

It is expected that the cost of Cyclohexane likely declines this month due to the poor performance from the end-use industries like construction, textile, and paints. Throughout recent days, the downstream textile industry has stayed at a level and has not moved a lot in the German market, demonstrating that the utilization of Cyclohexane in this industry deteriorated in July 2023. Further, the outlook shows that German business activity contracted in July, increasing the likelihood of a recession in the year's second half. Further, the rising interest rates dampened the demand for Cyclohexane in the downstream sectors at the start of the third quarter. The price of the Cyclohexane market declined by 1.2% in July 2023.