European Ortho-Xylene Market Grapples with Limited Downstream Demand in April 2024

Germany, (Hamburg): Ortho-Xylene (o-xylene) prices have persistently dropped across the European market during the second week of April 2024, supported by weak feedstock prices coupled with stable import offers. In addition, purchasing activity remained bleak as there were no signs of recovery in derivative sectors, with the construction sector witnessing slower consumption. Market players report that the high season has not yet begun, emphasizing the importance for players to maintain vigilant monitoring of demand. Furthermore, the level of inventories was sufficient despite supply challenges, which drove down o-xylene prices in the regional market.

According to ChemAnalyst's latest database, prices of o-xylene have witnessed a decrement of USD 30/MT in the German market. The cost support from feedstock Mixed Xylene was limited for o-xylene as its prices settled on the lower end, leading to bearish market sentiments among manufacturers. However, market players report that strong crude oil prices had little to no impact on sentiment, as demand woes took centre stage.

Meanwhile, imports from the Asian market have started to stabilize as global transportation costs have reached their lowest point since December, with the effects of the Suez Canal disruption diminishing and leading to a decline in spot container rates. On the other hand, global supplies have not been substantially impacted by either the Red Sea attacks or reduced capacity on the Panama Canal, as firms have adjusted to longer delivery schedules. The overall supply of o-xylene has been sufficient to meet downstream industry demand regardless of run rate cuts and some maintenance shutdowns in the previous quarter, further weighing down o-xylene prices in the domestic market.

Looking at the demand side, inquiries from the downstream Phthalic anhydride industry remained sluggish amid unfavourable economic conditions, which faltered demand from the end-user construction sector. According to market sources, the German construction Purchasing Manager Index (PMI) dropped from 39.1 in February to 38.3 in March 2024. The decline was particularly pronounced in housing activity, while commercial projects contracted at the slowest rate in five months. Civil engineering also saw a significant contraction during March 2024. Some sources suggest that demand from the downstream industry might improve from June. Thus, foreseeing enough supply along with tepid downstream demand has deteriorated o-xylene prices within the domestic market. As a result, prices of o-xylene CFR Hamburg were settled at USD 1480/MT on 12th April 2024.

ChemAnalyst expects prices of o-xylene to fall further in the European market due to further anticipated declines in demand from the downstream Phthalic anhydride industry. In addition, feedstock Mixed Xylene prices are anticipated to decrease, which might ease the overall production cost of o-xylene. Meanwhile, imports from the Asian market might stabilize further. Moreover, the level of inventories might be sufficient to meet downstream industry demand.