Rotterdam (The Netherlands): Mixed Xylene prices have risen across the European market in the first week of February 2024. The increase can be attributed to rising energy and raw material prices, elevated freight rates, and a total absence of shipments from Asia. However, demand for Mixed Xylene from the downstream derivative industry has not shown much enthusiasm, although it has had a limited impact on prices across the regional market. Additionally, the market direction in the near term is unclear, caught between cost escalations on one hand and weak demand on the other.

Prices of Mixed Xylene have increased by USD 20/MT in the German market. International crude oil prices have remained strong amidst geopolitical conflict, coupled with deep-freezing temperatures in the US. Both WTI and Brent crude, the two main oil benchmarks, surged to a two-month peak last week, marking their largest weekly increase of 6.3% since the start of the Israel-Hamas conflict in early October. Mounting energy prices have led to a firming trend in the feedstock Naphtha market, consequently increasing the production cost of Mixed Xylene in the domestic market. These factors have supported an uptrend in prices within the domestic market. Furthermore, Mixed Xylene players have been operating at reduced rates since Q3 of 2023 in response to a decline in downstream demand. Additionally, the German Manufacturing Purchasing Manager Index slightly increased from 43.3 in December to 45.5 in January 2024, although it remains firmly in contraction territory, indicating a deterioration in new orders and output. On the other hand, domestic Mixed Xylene supplies have faced disruptions amid a week-long rail strike in Germany. Moreover, in response to the rail strike, BASF has been forced to shift the movement of its chemical products in Germany on a large scale to road transport. Material availability has been observed on the lower side due to low production activities, further encouraging manufacturers to raise their offers.

Meanwhile, imports from the Asian market have been delayed at European ports due to unfavorable supply conditions. The situation in the Red Sea has created a logistical challenge for shippers and exporters, resulting in escalated freight rates, container prices, and insurance costs. New shipment cargos from Asia were priced at $200/ton above the most recent levels. However, buyers hesitated to engage in fresh import cargo due to ongoing disruptions and subsequent delivery delays. February shipment cargos are expected to arrive in May, possibly prompting a shift in market reaction. Overall, supply chain disruptions have reinforced a more robust outlook for February.

On the flip side, demand for Mixed Xylene from the downstream o-xylene, p-xylene, and m-xylene industries has remained inactive due to soft consumption from the end-user sector. The Ifo business climate index decreased from 86.3 points in December to 85.2 points in January 2024, reflecting a sentiment among German companies that has further diminished at the beginning of the year. Nonetheless, it was insufficient to drive down the price realizations of Mixed Xylene. As a ripple effect, prices of Mixed Xylene FOB Hamburg were settled at USD 970/MT during the week ending 2nd February 2024.

According to ChemAnalyst anticipation, prices of Mixed Xylene might rise as market players replenish inventories in the regional market. However, purchasing behaviour has not particularly changed, as players are sceptical about the state of demand amid poor consumption of Mixed Xylene. Feedstock Naphtha prices might gain pace, further supporting the anticipated increase in Mixed Xylene prices in the coming weeks.