European Mixed Xylene Market Shifted Direction on Weakening Cost Support And Limited Downstream Demand

Hamburg (Germany): European Mixed Xylene markets failed to sustain their short upturn, which began in the first half of April, supported by costs and tight supply. The upward movement was followed by a one-week stability before prices experienced renewed drops over the second week of May 2024 due to falls in upstream markets and weakened buying power.

Prices of Mixed Xylene have decreased by USD 50/MT in the German market. The key feedstock, naphtha prices, in the domestic market have continued to drop amid ample supply, combined with the recent slump in crude oil prices. Therefore, most manufacturers of Mixed Xylene have adjusted their offers downward, citing easing cost support. On the other hand, a market source report, in the first two weeks of May, observed US crude oil exports to Europe estimated to rebound, averaging at least 2.1 million barrels per day (bpd), up by a third compared to the average shipment in April.

Currently, manufacturing firms have not operated at full capacity as demand from the downstream industry has not recovered in the domestic market. Additionally, according to Destatis data, Germany's industrial output dropped 0.4% month-on-month in March, shifting from February's downwardly revised 1.7% growth. Market participants anticipated a further decline in the March figure. Despite this, material availability was sufficient as buyers made some small-volume replenishments in April to hedge against potential raw material increases. As a result, prices of Mixed Xylene have remained low in the domestic market.

Furthermore, underlying weakness in the domestic Mixed Xylene market continued to limit demand from the downstream o-xylene, p-xylene, as well as the m-xylene industry. Converters still preferred to buy on an as-needed basis, while buying interest further declined amid macroeconomic headwinds in the domestic market. Overall, subdued downstream demand contributed to a downward shift in the price realization of Mixed Xylene within the domestic market. However, according to the German Federal Statistics Office, Destatis, German exports slightly increased by 0.9% in March compared to the previous month. Although there was growth in March, overall exports contracted during the fourth quarter. For the week ending May 10th, prices of Mixed Xylene were settled at USD 1030/MT on a FOB Hamburg basis.

Looking ahead, ChemAnalyst expects prices of European Mixed Xylene to decline further due to expectations of decreased demand from downstream o-xylene, p-xylene, and m-xylene in the domestic market. Despite seasonal demand, consumption from end-users might remain sluggish, consequently impacting the demand for Mixed Xylene. Yet, costs may keep the size of drops modest as long as naphtha and oil prices remain close to their prevailing levels. Indeed, a recent slump in global oil benchmarks caused some concerns among suppliers.