European Mixed Xylene Market Remains Bearish in July 2024 Amid Fragile Downstream Demand

Hamburg, (Germany): In the European market, Mixed Xylene prices have been mostly downbeat since the beginning of July 2024, hit by the ongoing holidays which typically affect demand, apart from the ample material availability. The raw material cost has decreased, which further eased the prices of Mixed Xylene in the regional market. Although strong expenses in terms of high freight rates have remained supportive, a stable-to-lower trend has continued to reign over the regional market.

Prices of Mixed Xylene have declined by USD 30/MT on a weekly basis in the German market on account of slow buying sentiments. The cost support from feedstock Naphtha was limited to Mixed Xylene as its prices were observed on the lower end in the domestic market, leading to an upward shift in the price realization of Mixed Xylene in the domestic market. On the other hand, oil prices fell about 2% due to rising expectations of a ceasefire in Gaza and growing concerns about demand in China. As per the market sources, Brent futures dropped $ 1.39 or 1.7% to settle at $81.01 a barrel while US Texas closed $1.44 or 1.8% lower at $76.96. Moreover, domestic manufacturers of Mixed Xylene have been running their plants at limited rates to adjust their production with weak demand. Despite this, the availability of Mixed Xylene was sufficient to meet the existing downstream demand, keeping the prices downward in the domestic market.

On the demand front, the inquiries from the downstream intermediates have remained flat in the domestic market as consumption from the end-user sector was slower than expected with the onset of the holidays, leading to bearish market sentiment in the price realization of Mixed Xylene among the manufacturers. At the same time, demand from the overseas market has also been observed as soft, with converters limiting their purchasing volumes given poor end-product demand. As a result, prices of Mixed Xylene FOB Hamburg were settled at USD 920/MT during the week ending 26th July. In the broader economic context inflation in Europe's largest economy, Germany has increased unexpectedly by 2.2% in July as compared with the previous month. The rise in the inflation rate has further deteriorated consumer sentiments. Moreover, the German economy shrank in the second quarter, pouring cold water on hopes of a tentative recovery in Europe's largest economy.  Also, output contracted slightly by 0.1 percent compared with the last three months.

Looking ahead, ChemAnalyst anticipates demand for Mixed Xylene from the downstream derivative industry is not expected to improve in the European market. Over the longer term, supply is expected to increase since the heavy turnaround season in the regional market itself is coming to an end, gradually easing Mixed Xylene tightness.