Fading Upstream and Sluggish Demand Lead a Decline in European Cyclohexane Prices

During the first half of June 2024, Cyclohexane prices in Europe decreased by approximately 2.3%, driven by reduced support from Benzene, its primary raw material, and adverse demand from downstream sectors such as paints and coatings.

The cost of Benzene, crucial for Cyclohexane production, dropped significantly by more than 11%, effectively lowering manufacturing expenses. This decline stemmed from decreased demand in the Styrene and Polystyrene industries, impacting Cyclohexane pricing accordingly.

Europe encountered multiple supply disruptions during this period, notably due to severe flooding in major waterways like the Danube, Rhine, and Elbe. These incidents halted inland maritime transportation and caused delays in shipments from key ports like Rotterdam and Nuremberg, leading to sluggish circulation of Cyclohexane inventories across the continent.

Demand for Cyclohexane from the paints and coatings industries remained weak due to the sluggish performance of the construction sector. Regarding manufacturing, production across the eurozone showed signs of stabilizing in May. Although factory output declined, the contraction was the mildest in over a year and relatively minor overall. Companies noted decreased new orders, which continued to constrain production lines as the second quarter progressed.

The downturn in construction was widespread, with housing, commercial building, and civil engineering activities all experiencing sustained declines, which continued to negatively affect the demand conditions of Cyclohexane. Housing activity, while still the weakest sector, showed a slight easing in its rate of decline compared to recent months. Commercial building projects continued to decrease at a significant pace, maintaining pressure on Cyclohexane demand from paints and coatings sectors. Civil engineering, previously resilient, saw its decline deepen amid ongoing struggles in securing new projects and managing inventory, including Cyclohexane.

The construction sector's woes were compounded by a notable decrease in new orders, which accelerated for the first time in seven months. Foreign investors scaled back investment in German construction, further reducing incoming projects. Data from Statistics Bundesstaat indicated substantial declines in German real estate prices, with house prices falling by 2% and permits dropping by 12% in the first quarter of 2024. Property transactions plummeted by 70% from April 2023 to April 2024, reflecting diminishing investment confidence and signaling low demand for Cyclohexane.

In summary, the first half of June 2024 posed significant challenges for Cyclohexane markets in Europe. Price depreciation, supply disruptions due to natural disasters, and subdued demand from critical industrial sectors like paints and coatings underscored a challenging economic environment for producers and consumers alike. Overall, prices of Cyclohexane are expected to further decline in the upcoming weeks as the present depreciation in the prices of Benzene is expected to continue to present its effects on the production costs of Cyclohexane.