Raffinate Prices Expect to Decline in early January 2024 Amidst Demand Concerns

This week witnessed a decline in Raffinate pricing in the US market, primarily caused by the feedstock, crude oil, failing to provide sufficient cost support. This decline was partly influenced by the reduction in market transactions during the holidays. Additionally, the procurement of fresh orders depended on demand, and the manufacturing sector contracted, as indicated by the Purchasing Managers' Index (PMI) remaining below 50. A pessimistic outlook has been fostered by the persistent high interest rate, which has been at 5.5% since July 2023, further contributing to a general downturn in market sentiments.

Downstream industries, particularly MTBE and MEK, experienced challenges, but Raffinate factories continued to operate at regular speeds. Moreover, steady natural gas prices resulted in stable production costs, muting the Raffinate market's performance. Additionally, the expansion of the Raffinate market is further hindered by reduced market transactions.

Raffinate’s feedstock crude experienced an unexpected increase in US stocks, sparking concerns about demand in the main oil market, leading to a drop of almost a dollar per barrel. This development was primarily caused by the high interest rate and weak growth. Furthermore, the market's inventory levels were rising, further constraining market expansion. The stockpiles of fuel also increased, reflecting elevated US builds due to decreased exports of Raffinate’s feedstock crude and processed products. The economic challenges in Europe further impacted global market demand on the demand front.

Vice President of the European Central Bank, Luis de Guindos, asserts that concerns about Raffinate feedstock oil demand were exacerbated by Europe's bleak economic outlook. It is possible that the Eurozone entered a recession last quarter, and the situation does not look promising.

Raffinate is expected to decrease in the near term due to the falling prices of feedstock crude oil, according to the Chem Analyst Database. The poor economic performance of the European economy predicts low demand from the global market, with no anticipated improvement in the near future, resulting in muted market growth. However, the long-term market forecast for the US remains optimistic. This is expected to lead to increased demand from downstream industries of Raffinate, such as MEK and MTBE. Furthermore, with the rising market activity driving up production, natural gas prices are likely to increase. Additionally, restocking activity is expected to peak, leading to higher prices for inventory. It is anticipated that production plants will operate at their typical rates, despite heightened demand from downstream sectors. Together, these factors are not expected to propel the expansion of the Raffinate market.