US o-Xylene Prices Stabilize Amidst Stable Supplies and Steady Upstream Prices

Texas, (US): Heading towards the third week of July Ortho- Xylene (o-xylene) prices have been easing steadily across the North- American market with converters inundated with concerns over declining scope for margin recovery. Furthermore, a few producers of o-xylene who have been holding excess inventories were faced with the challenge of clearing their unsold inventories ahead of summer maintenance activity in the regional market. Meanwhile, July contract price negotiations concluded with a drop in prices, reflecting the dim market fundamentals and bearish upstream costs.

Prices of o-xylene have showcased a stagnancy with a marginal declination of USD 5/MT on a weekly basis in the US market. At the same time Mixed Xylene prices have been observed on a stable note in recent weeks, leading to stability in the production cost of o-xylene in the domestic market. On the other hand, crude oil prices experienced significant volatility last week, slipping from their highs after four consecutive weeks of gains due to conflicting global demand forecasts reported by two world-renowned agencies i.e. (OPEC), and the International Energy Agency (IEA). The fluctuations in demand forecasts kept traders, stockists, and arbitrageurs from making decisive moves, leading them to concentrate on short-term profits instead. The expectations of the US Fed’s interest rate cuts and strong rumors about China’s another round of stimulus also weighed on energy prices last week.

Regarding domestic production, the operating rates have remained low in the wake of economic uncertainties. On the US manufacturing front, the recovery was sputtering as the US manufacturing Purchasing Manager Index remained in the contraction zone (i.e., below the threshold point 50). Furthermore, several manufacturers of o-xylene such as Exxon Mobil and Phillips 66 reported that Hurricane Beryl has had a minimal impact on the prices of o-xylene in the domestic market. Overall, the availability of o-xylene was adequate to meet the existing downstream demand.

On the demand front, the inquiries from the downstream Phthalic anhydride industry have been steady as consumption from the key end-user sector construction industry was stable in the domestic market, leading the manufacturers to slightly decline their offers. As per the market sources, new home construction in the US saw an uptick in June. However, there was a notable decline in single-family housing, dropping to its lowest level in eight months. This underscores the challenges faced by the real estate market due to high interest rates. Total housing starts increased by 3% to a 1.35 million annualized rate last month, driven by a 19.6% surge in multifamily construction. Though, inquiries from the overseas market have been observed on the lower end, with buyers limiting their purchasing volumes given poor end-product demand. Thus, as a result, prices of O-xylene FOB Texas were settled at USD 1040/MT during the week ending 19th July.

Looking ahead, ChemAnalyst anticipates prices of o-xylene might remain on a soft note across the US market in the hope of a decline in feedstock Mixed Xylene prices. The demand for o-xylene from the downstream derivative industry is likely to decline in the coming weeks which may support the prices to follow a downtrend in the domestic market. Furthermore, the supply of o-xylene is expected to remain sufficient amid the decline in new orders which may put additional pressure on the prices of o-xylene.