German Cyclohexane Prices Rise in Early April 2024 Amid Higher Feedstock Costs

The first half of April 2024 witnessed prices of Cyclohexane increase by approximately 3% due to heightened production costs despite demand conditions from the downstream paints and coating industry being highly unfavorable. Increments in the prices of Cyclohexane were largely attributed to inflation in the prices of feedstock Benzene which had inflated by approximately 7%, thereby increasing production costs.

In terms of demand, the demand for Cyclohexane from the downstream paints and coating industry remained highly unfavorable due to the continued underperformance of the German construction sector.  All three segments of the construction, namely commercial building, residential construction, and civil engineering activities continued to remain in retrenchment for the fifteenth consecutive month, thereby reducing the demand for Cyclohexane from the downstream paints and coating industries.

On a monthly basis, sales of multifamily buildings led the downturn recording a 20% decline followed by sales of single-family homes which recorded an 11%, and lastly, sales of apartments registered a 9% drop in March 2024 which was the largest decline witnessed in over 60 years, with further depreciations anticipated towards the end of April 2024, further forecasting a bearish outlook on the German Cyclohexane prices. The only demand for Cyclohexane was recorded to have existed from the importing British market, where the construction sector returned to expansion, as the number of residential transactions increased from 1 million to 1.1 million on a quarterly basis. This uptick is attributed to both buyers and sellers being active in the market, with agreed sales being up by 11% and buyer demand being up by 15%. Moreover, in the UK rate of increments in house prices was recorded to have slowed as evidenced by a 5.8% year-on-year increase in the 12 months prior compared to a 9.7% increase in the same period in 2023, thereby forecasting a positive outlook on the German Cyclohexane prices.

Germany's manufacturing sector concluded the first quarter of the year still grappling with contraction. Although business outlooks regarding future output improved in March, persistent weak demand led to ongoing job reductions in factories and a continued depletion of pre-production inventories.

Overall, during the second of April 2024, prices of Cyclohexane are expected to depreciate as prices of Benzene moderate. The first two weeks of April 2024 witnessed prices of Benzene plummet by approximately 8% across the German market which is expected to ease production costs of Benzene in the latter half of April 2024. Also with demand from the downstream paints and coating industries not present, the German Cyclohexane market is expected to not have any support, either from the production side or from the demand side.