o-Xylene Slides Down Again in September Amidst Lackluster Demand in Europe

Hamburg, (Germany): During the second week of September, the European ortho-Xylene market experienced sluggish trading activity owing to dampened purchase appetite seen in the post-summer holiday period. Demand for o-Xylene remained subdued over the past week, with most buyers having concluded their purchase prior to September. Meanwhile, spot prices have remained in the stable to moderately weaker range, reflecting a slowdown in buyer inquiries.

o-Xylene prices have been on a downward trajectory in the German market due to a combination of sufficient supply and weak demand which has been exacerbated by economic headwinds in the domestic market. The domestic production cost of o-xylene has eased due to the decrease in feedstock Naphtha prices. Furthermore, global oil benchmark crude futures settled at their lowest level, after OPEC+ revised down its demand forecast for this year and 2025, offsetting supply concerns from Tropical Storm Francine. The decline in crude oil prices has further reflected the bearishness in the prices of o-Xylene across the domestic market.

On the other hand, the supply of o-Xylene was healthy and material from Asia was present in the German domestic market despite the delays. Moreover, the early peak season on the Asia-Europe Ocean trade that began in April appears to be drawing to a close as European import demand slows and spot rates fall sharply off-peak levels reached in July. As per the market sources, Asia-N. Europe prices decreased around 13% to $6,785/FEU on a weekly basis, keeping the import prices downward in the German domestic market.  Furthermore, players reported, the market is so volatile and unpredictable at the moment, but the underlying fundamentals would see rates continue to slide. Therefore, prices of o-Xylene CFR Hamburg were settled at USD 1240/MT with a week-on-week decrement of USD 20/MT during the week ending 13th September 2024.

In addition, the demand for o-Xylene from the downstream Phthalic anhydride market has continued to remain weak as consumption from the key end-user construction sector was below seasonal expectations. As per the market sources, German Construction Purchasing Manager Index remained in the contraction zone in August, reflecting a sharp fall in the new orders which further pressurized the prices of o-Xylene in the domestic market. On the other hand, the German inflation rate dropped by 2% in August amid a decline in energy prices, making it easier for the European Central Bank to cut interest rates this week. Market players report that the decline would not affect o-Xylene demand within the downstream industry.

Considering gloomy demand and rising supply, ChemAnalyst expect that the o-Xylene prices might remain soft across the European market in the short term. The demand for o-Xylene from the downstream Phthalic anhydride industry is not likely to recover until Q1 of 2025 which weigh down the prices of o-Xylene. Additionally, freight rates from Asia to Europe are expected to remain stable which may further pressure the import o-Xylene prices.