Global Mixed Xylene Prices Offset by Weak Upstream Market

During the third week of March 2023, prices of Mixed Xylene have witnessed a bearish trend across the globe, backed by the weak cost pressure from the upstream crude oil prices. Rising interest rates, gloomy demand, and firm inventories in the market have further weighed down the prices of Mixed Xylene. In addition, the collapse of two sizable US banks (Signature Bank and Silicon Valley Bank) and the subsequent crisis of confidence that has spread to other US regional banks and now European financial institutions pose the threat of severely tightening lending conditions at the very least and decelerating economic growth and potentially tilting the US and European economies into recession. In the Chinese market, Mixed- Xylene prices have witnessed a stagnancy with a marginal decline of USD 5/MT supported by the stable demand dynamics coupled with sufficient inventories. Operating rates have remained stable in the domestic market, while the steady imports from neighboring South Korea and other exporting countries resulted in adequate material availability in China's domestic market. On the other side, demand from the end-user  (o-Xylene, p-Xylene, and m-Xylene) has remained stable. However, demand from the construction sector continues to be weak amid China's property crises. In conclusion, Mixed Xylene Ex- Qingdao prices were assessed at USD 1083/MT during the week ending 17th March.

Similarly, Mixed Xylene prices have been observed on the lower side in the German market owing to the low-cost pressure from the upstream crude oil prices. According to the data on 17th March 2023, Brent Crude Oil prices dropped by around 7% due to weak global economic and banking worries, which weighed on market sentiment. Furthermore, Kazakhstan will supply 100,000 tonnes of oil via Russia's Druzhba pipeline to Germany in March 2023 for the PCK Schwedt refinery, thus improving supplies in the region. In addition, operating rates have remained weak in the domestic market due to sluggish consumption from the domestic market. Meanwhile, imports from the exporting country have comparatively lower than the domestic prices as prices drop in the Asian market. At the same time, consumption from the downstream value chain has subdued. Moreover, German manufacturing activity contracted in February, and Purchasing Manager's index (PMI) dropped from 47.3 to 46.3 in February. Thus, prices of Mixed Xylene were settled at USD 995/MT during the same time frame.

Furthermore, in the USA market, Mixed Xylene prices have showcased stagnancy with a marginal decline of 0.6%. Mixed Xylene prices were offered at USD 1116/MT during the week ending 17th March. Market participants reported that demand from the end-user industries has remained steady, while the firm inventories cater to the overall demand. Meanwhile, the latest economic data from the US shows deteriorating consumer spending and inflation at the producer level. Retail sales fell 0.4% from the previous month in February, while the Producer Price Index (PPI) fell 0.1%. However, the key Consumer Price Index (CPI) was up 0.4% in February month on month and is up 6.0% year on year, yet well above the Fed's 2% inflation target. 

As per ChemAnalayst, Global Mixed Xylene prices will anticipate increasing in the Q2 of 2023 due to further expectations of rising demand from the downstream value chain. Meanwhile, the US Federal Reserve will persistently be raising interest rates which might strengthen the dollar and also cap oil prices.