Europe Mixed Xylene Prices Remain Bullish Amid Low Supply and High Upstream Prices

Hamburg, (Germany): Despite the persistent sluggishness in buying sentiments, Mixed Xylene prices have continued to rise across the European market during the third week of February 2024. The manufacturers are pointing to rising energy and feedstock prices as well as limited supplies across the regional market to justify their further hike attempts. Furthermore, players were concerned about the ripple effects of the Red Sea diversions, keeping imports out of the market. Despite recent corrections, global ocean freight rates stand well above the pre-crisis level.

Prices of Mixed Xylene have shown an increment of USD 30/MT in the German market. The feedstock naphtha prices have continued to rise amid tight supply, which in turn resulted in the high production cost of Mixed Xylene in the domestic market, supporting the prices to follow an uptrend. On the upstream front, the crude oil prices settled higher as geopolitical tensions in the Middle East and weak demand. The Brent crude oil prices were offered at $82.35/barrel with a week-on-week increment of 4.1% during the week ending 16th February. The strong crude oil has further raised the overall production cost of Mixed Xylene within the domestic market. However, demand for Mixed Xylene from the downstream p-xylene, m-xylene, and o-xylene industries has remained average in the domestic market amid high-interest rates. Amidst the winter season, most market transactions were mainly based on small orders. Nonetheless, it had a limited bearing on the prices of Mixed Xylene.

On the supply side, market players report the availability of finished stock of Mixed Xylene was observed at the lower end in the domestic market which encouraged the manufacturers to raise their Mixed Xylene offers. In addition, throughout the past quarter, the operating rates of the Mixed Xylene manufacturing firms remained under pressure amid weak demand fundamentals from the downstream industries. According to the Federal Statistics Office, industrial production in Germany dropped 3 percent in December of 2023 over the same month in the previous year. However, despite reduced production rates, manufacturing firms did not experience substantial supply-side pressures as average demand from the downstream industry occurred.

Meanwhile, imports from the Asian market were higher amid elevated freight rates, disrupted supply chains, and firming in other major global markets. Players discuss whether or not these factors will help change the supply-demand dynamics next month. As a ripple effect, prices of Mixed Xylene FOB Hamburg were settled at USD 1000/MT during the week ending 16th February.

Looking ahead, ChemAnalyst anticipates European Mixed Xylene prices might increase in the coming weeks as market players restock their inventories in the hope of a rise in demand from the downstream industry. The feedstock naphtha outlook is firm for the time being amid higher crude oil prices and lower run rates at refineries during Q1 2024. Although the ongoing crisis in the Red Sea is expected to remain intact for the foreseeable future and continue affecting global freight rates, some market participants expect the impact to be relatively limited compared to the previous weeks.