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Weak Demand Pushes Down N-Hexane Prices in May 2024
Weak Demand Pushes Down N-Hexane Prices in May 2024

Weak Demand Pushes Down N-Hexane Prices in May 2024

  • 11-Jun-2024 3:53 PM
  • Journalist: Stella Fernandes

Qingdao (China): The price of n-Hexane continued to decline after mid-May 2024 due to low demand and decreased procurement activities in the domestic market of China. This trend followed an initial rise in prices earlier in the month, driven by strengthened cost support from feedstock naphtha, supply disruptions, and robust domestic demand during the festival season. Despite an increase in China’s exports and improvements in the manufacturing sector, the n-hexane market saw a shift in dynamics as demand from end-use industries, particularly food, began to wane. Factors such as global oil price fluctuations, influenced by geopolitical tensions and economic policies, also contributed to the market's volatility.

In the third week of May, the price of n-Hexane decreased due to weak cost support from feedstock naphtha and low downstream demand. The market atmosphere post-Labor Day holiday was light, with fewer inquiries from the food sector, indicating a temporary decline in demand. This period usually sees a surge in demand for n-hexane, but the expected uptick did not materialize. Additionally, weak cost support from feedstock naphtha, coupled with concerns about the Federal Reserve's interest rate policy, led to a decline in the overall crude oil market. These increased concerns about economic and demand prospects, causing a downward trend in oil prices, which in turn exerted downward pressure on n-Hexane prices. Weaker Malaysian palm oil export performance in the APAC also impacted food industry demand, further depressing prices.

Overall market sentiment remained negative due to low demand in China's food industry and a decrease in soybean imports, particularly from Brazil. This highlighted the impact of adverse weather conditions on global agricultural supply chains, affecting n-hexane prices in the downstream oil extraction industry. Enterprises adopted a cautious approach, reducing production to ease inventory pressure. Reports indicated that logistics issues stemming from the Red Sea crisis in the Middle East and adverse weather conditions in China, affecting soybean imports, compounded these issues. The decrease in soybean imports highlighted the impact on global agricultural supply chains and reduced the need for n-hexane in oil extraction processes. By the end of May, the overall market sentiment remained negative, with procurement activities significantly slowed and buyers hesitant to place new orders amidst ongoing disruptions. As of the end of May, the assessed price for n-hexane was USD 1351/MT FOB Qingdao, reflecting a significant decline from earlier in the month.

According to ChemAnalyst data, the outlook for n-Hexane suggests high optimism driven by smooth logistics and increased purchases. Anticipated high feedstock prices and rising energy costs are expected to exert upward pressure on n-Hexane prices. The operating rates are expected to increase, supported by a robust supply situation and improvement in demand. As summer procurement approaches, growing domestic and international demand will likely tighten supply and further elevate n-Hexane prices.

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