Weak Cost Support from the Crude Oil Keep Pressure on Raffinate Prices

Texas (USA): In the second half of Q4 2023, Raffinate prices experienced an increase, but a contrasting trend unfolded in December. This shift was influenced by a decrease in demand from the downstream industry and an uptick in destocking market activity. Additionally, the decline in Feedstock Crude oil prices played a pivotal role in shaping this development. The softening of oil prices resulted from reduced demand in the downstream industry. Moreover, market inventories remained persistently high, prompting the offering of products at discounted rates. There is an anticipation that Raffinate prices are poised to decrease against the backdrop of declining Raffinate Feedstock crude oil prices and ongoing destocking activities in the market. Amid concerns of oversupply and recent U.S. economic data revealing an unanticipated increase in consumer prices, crude oil prices have plummeted to their lowest point in half a year. This downward trend naturally got transmitted to the downstream Raffinate market through the supply chain.

Furthermore, the decline in the inflation rate from 3.2% in October to 3.1% in November indicates positive market sentiments. The expectation is that demand from Raffinate downstream industries like MTBE and MEK will decrease. Adding to the complexity, prevailing interest rates, standing at 5.5%, continue to exert constraints on the purchasing power of consumers in the Raffinate downstream industry like MTBE and MEK. Furthermore, the international market witnessed subdued demand, leading to the sale of inventories at lower prices.

Meanwhile, the plants maintained a steady operating capacity, resulting in a market saturated with inventories. Additionally, the rise in Feedstock Crude oil prices contributed to a general upswing in the Raffinate market in China. However, despite robust domestic demand, especially from Raffinate downstream industries like MTBE and MEK, the Purchasing Managers' Index (PMI) reported a value of 48.20, indicating contraction in the manufacturing sector.

According to the Chem Analyst Database, "The prices of Raffinate are expected to decline against the backdrop of lowering crude oil prices. Furthermore, market inventories remain on the higher side, leading to offerings at discounted rates as sellers will eventually be bound to sell inventories at lower prices amid high inventory levels and lower downstream demand. Additionally, in January, the prices of Raffinate are anticipated to remain on the lower end due to high inventory levels in the market. Furthermore, overall transactions in the market are expected to be at a lower end due to weak market activity, but they are anticipated to rise in February due to increased market activity and rising demand from the international market. Furthermore, production is expected to increase against the backdrop of rising crude oil prices and increasing natural gas prices.