Demand Spikes Lead to n-Hexane Price Improvement in Europe

Rotterdam (The Netherlands): Following a decline in mid-March 2024, Europe's domestic n-Hexane market witnessed a positive shift, driven by several factors. This turnaround was supported by favorable cost structures derived from feedstock naphtha and a notable uptick in demand from the food industry downstream. The increase in global crude oil prices, propelled by geopolitical tensions in the Middle East, imposed pressure on production costs for n-Hexane manufacturers, mainly due to higher feedstock naphtha prices. Nevertheless, while buying enthusiasm remained moderate, consumer prices started to climb, signaling a gradual recovery in the food industry. Furthermore, the United Nations Food and Agriculture Organization's report on a rebound in world food prices in March, particularly in vegetable oils like sunflower oil, provided additional optimism for the n-Hexane market. This indicates a promising outlook for countries like the Netherlands, Germany, and others, as the food industry continues to strengthen, fostering increased demand for n-Hexane.

There was a significant uptick in downstream oil extraction, which correlated with an increase in food prices, as evidenced by a notable surge in n-Hexane prices in the Netherlands' domestic market. This price hike reflected heightened local demand, spurred by the global rise in food prices reported by the United Nations Food and Agriculture Organization in March, especially in vegetable oils like sunflower and rapeseed oil. This increase in demand indicated a positive trajectory in the downstream sector, prompting manufacturers to ramp up production to meet the growing demand. Moreover, the demand in other downstream sectors such as paint and coating industries saw improvement, driven by robust demand in the automobile industry, which bolstered market sentiments for n-Hexane. Additionally, improved demand from overseas markets also impacted the price of n-Hexane in the Netherlands, further emphasizing the positive momentum in the sector. This overall surge in demand across various sectors suggests a promising outlook for n-Hexane in the Netherlands and beyond.

Furthermore, the ongoing Red Sea crisis presented a significant obstacle to the European market, leading to supply chain disruptions caused by Houthi attacks in the Red Sea and temporary shutdowns of various petrochemical units in Europe. These disruptions, coupled with other factors such as drone attacks on Russian refineries and the shipping crisis in the Red Sea, collectively contributed to the escalation of production costs for n-Hexane. Despite the presence of lower natural gas prices, the elevated prices of feedstock naphtha helped to sustain a healthy n-Hexane price. Consequently, the n-Hexane market witnessed an uptick, with prices reaching USD 1058/MT FD Rotterdam by April 5th, marking a 2.7% increase.

ChemAnalyst expects that the upward trend in n-Hexane prices is set to persist in the upcoming month. This projection is influenced by the expected strong demand in the downstream industry and the high prices of feedstock, indicating a positive change in market dynamics. Furthermore, there is anticipation for continued improvement in global demand for n-Hexane, which will further support the ongoing upward trend in prices.