Cyclohexane Prices Decline in Feb 2024, Takes Support from Feedstock and Low Demand

The Dutch market saw prices of Cyclohexane marginally depreciate by approximately 2% during the middle of the first quarter of 2024, despite prices of feedstock Benzene witnessing a surge of approximately 14% during the same timeframe.

The prime reason for the depreciation in the prices of Cyclohexane is largely attributed to the reluctance amongst residential investors and declined demand for office spaces as bankruptcies increase amongst construction firms. With capital market interest rates on the rise, investment confidence in commercial real estate continued to remain low, which consequently led to the cancellation of construction projects. Thereby having a detrimental impact on the demand for Cyclohexane, as demand from the downstream paints and coating industries subdued. Investment volume in the real estate market fell by 53% in 2024 with further depreciations anticipated towards the end of 2024 and institutional volume (consisting of pension funds and insurers)  fell by 70% in 2023 with depreciations likely expected towards the termination of 2024.

Despite positive effects seen across the Dutch construction sector so far, as evidenced by the stabilization of property prices, the outlook remains largely uncertain. Some of the key uncertainties include decreasing demand for office spaces and rising bankruptcies in the non-food sector (such as electronics, clothing, etc,)  which is expected to have a detrimental impact on the prices of Cyclohexane.

Overall a moderate demand for Cyclohexane across the Netherlands continues to originate from the prevailing structural scarcity in the supply of logistics property which has continued to prevent the prices from witnessing severe depreciations. Moreover, inventories in the supply of Cyclohexane to the Netherlands also prevailed as overall industrial chemical production fell by 1.6% in January 2024 and did not recover. Moreover, BASF a leading manufacturer of Cyclohexane, announced cost-cutting measures amounting to EUR 1 billion, both in production and non-production sectors at its home site in Ludwigshafen amid sinking demand and higher energy prices which may result in increased prices across the importing Dutch market.

Overall, prices of Cyclohexane are anticipated to rise as prices of feedstock are also anticipated to increase in the near term. Moreover, anticipated improvement in demand for residential properties from investors is also expected as renovation activities may increase due to the expiration of rental contracts from the previous owners, given the supply crunch in housing in the Dutch market. This is also expected to improve the demand for Cyclohexane in the Netherlands market in coming months.