Mixed Xylene Prices Nosedive in German Market Amidst Bleak Downstream Demand

Entering in September 2023, Mixed Xylene prices have inched lower in the German market. Demand for Mixed Xylene from the downstream xylene value chain (p-xylene, m-xylene, and o-xylene) has remained sluggish amid ongoing uncertainty and reduced industrial activity. However, feedstock Naphtha prices have continued to rise, lifted by strong crude oil prices, which increased production costs of Mixed Xylene, compelling manufacturers to decrease their prices to maintain competitiveness in the domestic market. On the upstream energy front, despite the numerous supply chain disruptions, Eurozone Natural gas prices have settled on the weaker side because of weak demand and high storage levels. The Dutch September contract prices were down by 0.50 Euro to 34.75 Euro per Megawatt-Hour (MWh), while the contract for October was 0.98 Euro lower at 37.60 Euros/MWh. The Eurozone has already reached a target of 90% full gas storage by 1 November 2023. According to Gas Infrastructure data, EU gas storage sites were 93% full as of 1 September 2023.

According to the ChemAnalyst database, Mixed Xylene prices have declined by USD 25/MT, and prices were settled at USD 1185/MT on a FOB Hamburg basis in the week ending 1 September 2023. The availability of finished goods of Mixed Xylene remained adequate to cater to overall downstream demand. As a result, the manufacturing firms cut their operating rates to avoid excessive stockpiling in the domestic market. Furthermore, Germany's trade surplus decreased more than expected in July 2023 on weak exports and rising imports, reflecting the possibility of economic contraction in the third quarter. According to the information available, there was a 0.9% decrease in exports in July 2023, which contrasts with the slight increase of 0.2% that was observed in June 2023.. In addition, weak economic conditions, depicted by a high unemployment rate and eased consumer spending, further deteriorated the Mixed Xylene demand.

On the demand front, the inquiries for Mixed Xylene from the downstream xylene value chain, such as o-xylene, p-xylene, and m-xylene, remained inadequate amidst sluggish buying trends among the end-users. Market players reported that the enthusiasm of terminal firm to enter the market were not strong, and market transactions of Mixed Xylene were relatively low, which further supported the Mixed Xylene prices to follow a downtrend in the domestic market. The German manufacturing purchasing managers were slightly improved from 38.8 in July to 39.1 in August 2023 but still below bar performance, demonstrating a contraction in new orders.

On the other hand, the German Federal government has formally avowed that the German economy has undergone a recession for three straight quarters, continuing until the end of June. Given the grim economic outlook, investors have cut their expectations, alarming the possibility of the European Central Bank executing a tenth successive interest rate increase at its next meeting on 14 September.

As per the ChemAnalyst, in forthcoming weeks, prices of Mixed Xylene are anticipated to rise in the European market on account of high-cost pressure from upstream values. However, demand for Mixed Xylene might remain on the lighter side amid economic uncertainties.