Downstream Demand Collapse Leads to Mixed Xylene Price Decline in US and European Markets

Entering in October 2023, Mixed Xylene prices have inched lower across the US and European markets. The price decline has been fuelled by lukewarm downstream demand amid persistent inflationary pressure and the central bank's high interest rates, which worsened the consumer's sentiments. However, inflation rates have been eased above the central bank's expectation of 2%. Despite high energy prices, feedstock Naphtha prices have decreased, which further weighed down the prices of Mixed Xylene.

According to ChemAnalayst's latest database, prices of Mixed Xylene have declined by USD 20/MT in the US market during the first week of October. The feedstock Naphtha prices have also been on the lower side, resulting in the low production cost of Mixed Xylene in the domestic market. On the upstream front, global Crude oil prices have remained positive end amid reduced production from OPEC+ and voluntary cuts from Saudi Arabia and Russia. However, those cuts could be partially offset by rising output in Brazil, the US, and other countries that do not belong to OPEC+. Furthermore, market participants predict that crude oil prices will increase in the coming weeks in response to the military conflict in the Middle East, which could impact the production of feedstock Naphtha prices. In addition, demand for Mixed Xylene from the downstream Xylene value chain (m-xylene, p-xylene, o-xylene) has remained lackluster as offtake from the end-user industry has not improved yet, which promoted the manufacturers to revise their negative quotation. At the same time, inquiries from the overseas market have also been subdued amid macroeconomic headwinds. Furthermore, the operating rates remained steady as demand from the downstream industry had not fully recovered in the domestic market. Although the US manufacturing Purchasing Manager's Index has increased from 47.6 in August to 49 in September, it is still below bar performance, reflecting a contraction in new orders amid weak global demand. Mixed Xylene FOB Louisiana prices were settled at USD 1220/MT during the week ending 6 October 2023 as a ripple effect.

On the other side, Mixed Xylene prices have significantly declined in Europe's largest economy, Germany. Despite the high crude oil prices, feedstock Naphtha prices have dropped, which eased the production cost of Mixed Xylene in the domestic market. Although market participants predict that Naphtha prices have temporarily diminished, in the coming weeks, they gain pace. Furthermore, demand for Mixed Xylene from the downstream o-xylene, p-xylene, and m-xylene has remained inactive, and the enthusiasm for transactions of Mixed Xylene was average in the domestic market. The ifo Business Climate Index was tumble from 85.8 points in August to 85.7 points in September. On the other side, The German market has been grappled with low Rhine water level after recent dry weather, which prevented cargo vessels from sailing fully, with surcharges added to the usual freight rates; currently, it had limited bearing on the supply of Mixed Xylene as there was weak demand and sufficient supply in the market. Therefore, as per the aforementioned scenario, prices of Mixed Xylene were offered at USD 1045/MT with a week-on-week decrement of USD 75/MT during the same time frame.

As per ChemAnalyst's estimation, Mixed Xylene prices are likely to increase but at a slower pace in the US and European markets. The international crude oil prices are anticipated to increase, which might impact the feedstock Naphtha prices. Although, the inquiry from the downstream industry is not expected to rise till the end of Q4 of 2023.