US Cyclohexanone Price Falls Entering August as US Supply Surges and Demand Weakens

During the week ending on 2^nd August 2024, Cyclohexanone prices in the US market experienced a slight decline due to several factors. Increased domestic production and inventory adjustments led to a temporary market surplus, while falling benzene prices (by around 3%) eased production costs. Additionally, stabilized costs of key raw materials such as silica and methyl chloride contributed to reduced production expenses.

The supply of Cyclohexanone increased in the US, resulting in a market surplus. Port congestion in the US has eased, with major ports preparing for peak season volumes and potential cargo shifts from the East Coast if the October strike occurs. Although congestion persists in Asia, conditions are improving on key East-West lanes due to increased capacity from major carriers and new entrants. While freight rates have dipped slightly, they remain high, suggesting that while peak pressure may have passed, a gradual rate of decline is more likely.

On the demand side in the US, Cyclohexanone demand faced challenges due to a seasonal slowdown, with steady needs from downstream industries such as adipic acid and caprolactam. A slight deceleration in the US economy also contributed to reduced overall demand for the chemical including Cyclohexanone. Consumer prices increased by 0.2% in July following a 0.1% decline in June, according to the Labor Department. Although prices rose, the overall inflation trend eased, with the annual CPI growth slowing to 2.9% from 3.0% in June. This trend supports expectations of a potential interest rate cut by the Federal Reserve next month.

Overall, these factors led Cyclohexanone prices falling to USD 1600/MT, FOB Texas, reflecting a decrease of USD 13/MT or -1%. Crude oil prices also impacted the Cyclohexanone market. Brent crude averaged USD 85 per barrel in July 2024, up USD 3 from June, but prices declined towards the end of the month due to concerns over a global economic slowdown. The Energy Information Administration (EIA) forecasts Brent crude to average USD 85 per barrel for the rest of 2024 and USD 89 per barrel in Q1 2025. Fluctuating crude oil prices have influenced Cyclohexanone production costs due to their link with raw material prices.

In industry news, PPG has extended its partnerships with Indianapolis Motor Speedway (IMS), INDYCAR, and Team Penske through 2029, highlighting the importance of durable coatings in motorsports, where Cyclohexanone is used. The International Woodworking Fair (IWF) in Atlanta showcased innovations from AkzoNobel Wood Coatings and Chemcraft, emphasizing Cyclohexanone's role in enhancing coating durability. These innovations reflect the ongoing demand for high-performance coatings in industries that also utilize Cyclohexanone.

Looking ahead, Cyclohexanone prices in August are expected to be influenced by increased activity in industries such as adipic acid production and paint/coatings manufacturing, which typically boost demand. However, seasonal reductions in textile production and lower summer industry demand may counterbalance this effect. In September, prices might stabilize or decline slightly due to reduced demand from summer activities and potential increases in benzene production.