High Feedstock Prices Drive Up European Mixed Xylene Prices in Late Q1 2024

Hamburg (Germany): After experiencing stagnation in the previous week, Mixed Xylene prices have strengthened across the European market during the fourth week of March 2024, supported by high upstream prices coupled with tight supply across the regional market. Prices of Mixed Xylene have witnessed an increment of USD 40/MT in the German market. However, consumption of Mixed Xylene from the downstream industry has remained subdued due to unfavourable market conditions. Market players anticipate that Mixed Xylene prices might decline in the forthcoming week due to further expectations of a decrease in demand from the downstream industry.

The cost side was one of the major drivers of the uptrend as feedstock Naphtha prices have continued to rise, leading to bullish market sentiments of Mixed Xylene among the manufacturers. On the upstream front, global crude oil prices have remained above USD 80 per barrel, indicating tightening in the physical market amid ongoing OPEC+ production cuts and the prolonged rerouting of cargoes away from the Red Sea and Suez Canal. The strong crude oil prices have further pressured the feedstock Naphtha prices to remain firm within the domestic market.

Despite this, OPEC+ is not planning any policy changes in the upcoming joint Ministerial Monitoring Committee meeting. Meanwhile, geopolitical tensions in the Middle East and Russia are raising concerns about tighter supply. Market players are closely monitoring these developments, alongside global economic struggles against recession and the Federal Reserve's potential rate cuts this summer.

Regarding domestic production, for the past few quarters, manufacturing firms have been operating at reduced rates in the backdrop of challenging economic conditions across the domestic market. As a result of low operating rates, manufacturing firms have faced increased supply-side pressures due to the limited availability of Mixed Xylene. Thus, foreseeing the limited supply and high production cost, promoted the Mixed Xylene manufacturers to raise their offers to gain some profit margins. However, on the other hand, demand for Mixed Xylene from the downstream Xylene derivative, notably m-xylene, p-xylene, and o-xylene industry, has remained flat as consumption from the end-user sector has not improved in the domestic market.

Furthermore, market players report buyers remained sidelined in anticipation of lower prices next month. As they considered March as the last month of hikes, buyers already secured their needs back in January and February, keeping purchasing volumes negligible so far this month. As a ripple effect, prices of Mixed Xylene FOB Hamburg were settled at USD 1100/MT during the week ending 22nd March.

Regional sellers, having disclosed their initial March deals with price hikes surpassing their costs to restore their margins, faced challenges in maintaining consistent sales. ChemAnalyst expects Mixed Xylene prices to be revised down, with demand showing no signs of recovery in the upcoming weeks. However, feedstock Naphtha prices are expected to settle higher amid strong Brent futures standing firm above USD 85/bbl, but it might have a minimal impact on the prices of Mixed Xylene.