Lackluster Terminal Demand Pressure the Market Growth of Cyclohexanone in Late Q1

Hamburg, Germany: Slowdown in consumption from the downstream Adipic Acid industries has hampered the upward momentum of the Cyclohexanone price trend in the European market. Foreseeing the decline in demand from the terminal market, the manufacturers have opted for a production cut for the sustenance of their profit margins. In late Q1 of 2023, the inflationary pressures started to diminish albeit at a slower pace, which has further inflicted the European Central Bank to tighten its monetary policies.

In the domestic region of Italy, There were sufficient quantities of raw materials to accommodate the end-use industries' demand. The downstream purchases from Adipic Acid industries were not exorbitant and therefore did not result in high-end quotations for Cyclohexanone. Despite BASF, a major market player, limiting Cyclohexanone production at Ludwigshafen, supplies from the US and Asian markets were enough for the European market. Furthermore, In 21st March 2023 Olin announced that it will restrict operations at the upstream Cumene plant in Terneuzen, the Netherlands. Although the existing Cyclohexanone inventories in the Dutch market were sufficient, thus the Cyclohexanone prices have demonstrated no significant fluctuations and settled at USD 1805 per ton in the week ending 31st March.

Whereas, In the German market, The Verdi and EVG rail transport unions in Germany are on strike, which affects all modes of transportation, including highways, airports, ports, and railroads. Germany's transportation networks are intended to be completely shut down by the mega strike. In addition, the decision by OPEC+ countries to slash Crude Oil production might increase the production costs of several petrochemicals, including Cyclohexanone.

According to the pricing intelligence of ChemAnalyst, a rise is forecasted in the price realizations of Cyclohexanone in the European market. The worker's strike might be led to widespread disruption to railways, ports, and airports in Europe's largest economy and impede the flow of finished goods, and result in inventory disbalance in the near term. Moreover, the rise in the market values of Brent Crude Oil is also likely to evaporate the downside risks on the market fundamentals of Cyclohexanone in the European region.