European Mixed Xylene Prices Surge Amid Rising Cost and Limited Supply

Hamburg, (Germany):  Mixed Xylene prices have firmed across the European market during the second week of July 2024 on the back of better-than-expected improvement in domestic demand. Furthermore, higher upstream costs and an increasing focus on upcoming planned cracker outages have further contributed the prices to following an uptrend of Mixed Xylene in the regional market.

According to ChemAnalyst latest database, prices of Mixed Xylene showcased an increment of USD 50/MT in the German market. The feedstock Naphtha prices have increased in the last two weeks which led to the high domestic production cost of Mixed Xylene. Additionally, Brent crude oil prices have hit their highest level holding above $87 a barrel in early July, showing a decline in the US inventories. On the other side, European Natural gas futures increased by around 2% rebounding from a 4.3% drop the last week due to supply risks from hot weather in Asia and a hurricane in Texas. Although Europe has ample gas inventories, global disruptions like unexpected outages and rising air conditioning demand are raising concerns. The rise in energy prices has further boosted the prices of Mixed Xylene. Consequently, prices of Mixed Xylene FOB Hamburg were settled at USD 970/MT during the week ending 12th July.

In addition, the operating rates have remained under pressure in the domestic market owing to firmer Naphtha prices. The material availability was observed on the lower end, leading to an upward shift in the price realization of Mixed Xylene across the domestic market. Moreover, the planned cracker maintenance beginning in September, particularly in Germany, is expected to face limited alternative supply flexibility due to pressure problems on the ARG pipeline.

On the other side, domestic demand for Mixed Xylene from the downstream p-xylene industry has improved in the recent week due to a rise in consumption from the key end-user sector which further escalated the prices of Mixed Xylene. However, inquiries from the other chemicals o-xylene and m-xylene have remained soft due to weak buying sentiments among the end-users. At the same time, procurements from the overseas market have declined in the wake of macroeconomic headwinds.

In the broader economic context, German inflation dropped more than expected in June, resuming its downward trend after two consecutive months of increases, and leaving the door open for another rate cut by the European Central Bank in September. According to preliminary data from the Federal Statistics Office, inflation eased to 2.5% in June, down from 2.8% in May. Lower interest rates can stimulate economic activity and drive up the demand for various commodities including Mixed Xylene.

In the short term, ChemAnalyst anticipates, prices of Mixed Xylene might continue to increase in the European market owing to bullish forecast of upstream cost. In addition, the demand from the downstream p-xylene is likely to rise in the regional market. Furthermore, the supply of Mixed Xylene is anticipated to remain tight due to logistical issues.