Busan (South Korea): After a mid-March 2024, Asia's domestic n-hexane market experienced an optimistic turnaround following a period of decline. This recovery was underpinned by favorable cost structures from feedstock naphtha and a notable increase in demand from the food industry downstream. The surge in global crude oil prices, driven by geopolitical tensions in the Middle East, exerted pressure on production costs for n-hexane manufacturers, primarily due to elevated feedstock naphtha prices. Despite this, buying enthusiasm remained moderate, contributing to rising consumer prices and signaling a gradual revival in the food industry. The United Nations Food and Agriculture Organization reported a rebound in world food prices in March, particularly in vegetable oils like sunflower oil, hinting at a brighter outlook for the n-hexane market in Asia as the food industry continues to improve in countries like South Korea, China, and others.

Downstream oil extraction witnessed a significant rise, reflecting an increase in food prices and evidenced by a notable surge in n-hexane prices in South Korea's domestic market. This price hike indicated heightened local demand, spurred on by the global increase in food prices reported by the United Nations Food and Agriculture Organization in March, particularly in vegetable oils like sunflower and rapeseed oil. The uptick in demand signaled a positive trajectory in the downstream sector, prompting manufacturers to increase production to meet growing demand. Additionally, improved demand from overseas markets also impacted the price of n-hexane in South Korea, further underlining the positive momentum in the sector.

China's robust economic performance in the first quarter of 2024, characterized by a GDP growth rate of 5.3%, fueled optimism in the region. However, despite this growth, the paint and coating industry faced challenges due to a slowdown in the construction sector, which did not match the upward pressure on prices. Recent data from China Real Estate revealed a significant 46% drop in the value of new-home sales compared to the previous year, following a notable 60% decrease in February. Moreover, the ongoing Red Sea crisis posed a considerable challenge to the Asian market, resulting in higher freight costs for upstream crude oil. Various factors, including drone attacks on Russian refineries and the shipping crisis in the Red Sea, collectively elevated the production cost of n-hexane. Despite low coal prices in many Asian countries, which kept production costs down, elevated feedstock naphtha prices helped maintain a healthy n-hexane price. As a result, the n-hexane market experienced an increase, with prices reaching USD 1349/MT, FOB-Busan.

According to ChemAnalyst, the price of n-hexane is poised to continue its upward trajectory in the coming months. This forecast is driven by anticipated robust demand in the downstream industry and high feedstock prices, signaling a favorable shift in market dynamics. Additionally, global demand for n-hexane is expected to see further improvement, contributing to the sustained upward trend in prices.