Hamburg (Germany): Hexene prices have recovered in European markets after remaining flat for the past two months. This trend is also reflected in the continuous recovery of demand for ethylene in European markets, resulting in the improvement in cracker margins and enhanced operability of European crackers compared to Chinese and American crackers. The recovery in Hexene prices is pertinent as FY23 observed strong destocking and lower production volumes. With the beginning of FY24, price revisions in ethylene and propylene across global markets were observed, indicating suppliers expect relatively stronger demand for downstream Hexene and polyethylene in FY24.

In European markets, challenges pertaining to energy and feedstock pricing are settling down largely owing to weak global demand and a softer winter observed in FY23. Europe has also recorded high levels of gas inventories that are being carried over to FY24. In this context, with falling inflation and the Eurozone observing improvement in demand for Hexene/ethylene copolymer in the early months of March 2024. Two other factors contributed to the price rise of Hexene: Price revisions of ethylene by Middle Eastern suppliers and supply chain disruption across the Indian Ocean for supply coming from South Korea to Northern Europe.

ChemAnalyst assessed FOB Seoul and FD Hamburg of Hexene for the months of February and early weeks of March. The assessment revealed that large volumes of trade are currently dominated by Northern Europe and North America, holding a large number of LNG and liquid tankers, which is causing strong price acceleration for European imports through Korea and the Middle East. Price support is also provided by improving inventory pressures and growing demand for green and sustainable transition technologies. LyondellBasell revealed that they expect relatively better sales realization in terms of volumes as well as prices in Europe in H1 FY24. Korean suppliers of Hexene have been tightening their supply for exports as domestic demand for Hexene is rising, especially from automotive manufacturing.

ChemAnalyst retains the Hexene forecast for March and April as a bullish trend for Europe, as inventory pressure is expected to increase on a yearly basis, with Europe's energy prices deflating by 47% in FY23 over FY22 peak prices and cracker margins showing improvement. Downstream polyethylene markets are expected to kickstart manufacturing in German markets as inflation and mortgage rates continue to fall. The macroeconomic outlook shows that German imports of Hexene fell by 42% in annual volume terms from FY21 level in FY23 while price escalation peaked at 63% in FY22 and slowed down to 38% in FY23 over FY21 levels. This dataset correlates with rising refinance interest rates in Germany from 0.5 to 4.5%, indicating a cash crunch continues to exist in German industries, which is showing signs of recovery in the latter half of Q1 FY24 after subdued industrial activity in FY23, as reflected in prices and volume flows.