European Cyclohexane Market Remains Stable Amid Modest Demand and Potential Disruptions

The European Cyclohexane market is currently stable, despite a decline in feedstock prices in late September 2024. Demand for Cyclohexane across Europe remains moderate, with limited trading activity. Suppliers are keeping inventory levels low and are reluctant to negotiate prices due to reduced petrochemical production rates, including Cyclohexane.

Demand for Cyclohexane has been particularly sluggish in the downstream paints and coatings industries and the textile sector, as post-summer demand has not met expectations.

In Germany, the paints and coatings sector continue to face challenges due to a downturn in the construction industry imparting a downward pressure on the demand for Cyclohexane. Approvals for new flat constructions dropped by 21.1% from January to June compared to the same period last year, decreasing by 28,500 to a total of 106,700 approvals. The decline was most severe for new single-family homes, which fell by 30.9% to 18,600 approvals. Approvals for two-family houses decreased by 14.9%, totalling 6,600, while commitments for multi-family homes, the largest category, dropped 20.8% to 57,300 flats, leading to unfavourable demand conditions. Additionally, reduced consumer spending on non-essential items has resulted in growth driven mainly by price, with volumes increasing by only 0.4%, remaining 3.5% below previous levels, further straining demand of Cyclohexane.

Conversely, the Netherlands has seen some improvements, particularly in the construction sector. In the second quarter of 2024, 6.1 thousand new-build homes were sold, marking a 30% increase from the previous quarter and an 84% increase compared to one year earlier. The average sale price of new-build homes remained nearly unchanged from Q2 2023, while existing owner-occupied dwellings for sale became more expensive for the fourth consecutive quarter. These figures, released by Statistics Netherlands (CBS), the Cadastre, Land Registry and Mapping Agency (Kadaster), and Eurostat, may have contributed to market stabilization of Cyclohexane.

However, the Cyclohexane market faces potential disruptions due to industrial actions. The German trade union Ver.di has called on its members to take part in "warning strikes," which could greatly affect operations at German seaports, although the strikes have not yet occurred. These actions are planned to coincide with the fourth round of negotiations with the Central Association of German Seaport Operators (ZDS) during the first week of October 2024. Concerns about potential export disruptions and the buildup of inventory at ports are adding further complexity to the market.

Overall, Cyclohexane prices are expected to rise alongside anticipated increases in Benzene prices. Additionally, the festive quarter is projected to improve demand conditions, further supporting expectations for market growth.