Strong costs and limited supply, push Mixed Xylene prices high in the European Market

Hamburg (Germany): After experiencing stagnancy for the last two weeks, Mixed Xylene prices have boosted across the European market during the third week of April 2024. The rallying energy prices have substantially pushed the raw material cost upward and underpinned fresh hikes in Mixed Xylene markets. Adding to the scenario is the cautious improvement in buying interest; however, the overall state of demand has remained subdued in the regional market.

According to ChemAnalyst's latest database, prices of Mixed Xylene have escalated by USD 20/MT in the German market. The feedstock Naphtha prices have increased throughout the month, resulting in the high production cost of Mixed Xylene in the domestic market, contributing to the uptrend in the price realization of Butadiene. On the upstream front, oil prices surged by more than USD 3/barrel with Brent crude crossing above USD 90/barrel amid heightened fears of supply disruptions following unofficial reports of explosions in the Middle East. Additionally, the oil rally has further fuelled a strong trend in several commodities, including Mixed Xylene. Furthermore, the German manufacturing sector has been grappling with reduced activity since Q3 2023, as a significant number of manufacturers have scaled back their operations in the wake of persistent inflationary pressures coupled with weak demand. This reduction in manufacturing has further strengthened supply-side pressure, driving up the Mixed Xylene prices in the domestic market.

Additionally, the rising prices of Mixed Xylene have encouraged some buying enthusiasm among downstream converters to hedge against further increases. Meanwhile, low inventory levels in the domestic market have encouraged manufacturers to raise their offers to protect their margins.

However, the demand for Mixed Xylene from downstream Xylene derivatives including o-xylene, p-xylene, and m-xylene was yet to provide full support for the ongoing upswing in Mixed Xylene prices. Market players report that higher prices indeed result in more active buying activity, but it remains at replenishment rather than stockpiling amid underperforming downstream sectors. Moreover, a series of holidays across the region has also dampened the market trading atmosphere lately. In the meantime, demand from the overseas market has dampened amid unfavourable economic conditions. As per market sources, Germany's exports dropped by 2.0 percent month-on-month in February, in contrast to the 6.3 percent increase in January. Thus, as a result, prices of Mixed Xylene FOB Hamburg were settled at USD 1130/MT during the week ending 19th April.

Looking ahead, ChemAnalyst expects European Mixed Xylene prices to increase in the forthcoming weeks as feedstock prices will remain on the higher end followed by strong crude oil prices. However, demand for Mixed Xylene is not likely to recover any time soon amid macroeconomic headwinds. Furthermore, the supply of Mixed Xylene is anticipated to be sufficient. Nonetheless, it will have a limited bearing on the prices of Mixed Xylene.