Amidst Falling Downstream Demand, Global Raffinate Prices Dropped Throughout December 2022
- 16-Jan-2023 3:45 PM
- Journalist: Shiba Teramoto
Since the beginning of December 2022, the prices of Raffinate have witnessed a downward trajectory across the globe. Weak feedstock cost, bleak demand, sufficient material availability, high inflation, and economic downturn have been the primary factors that affected Raffinate market growth.
Raffinate prices have declined by 6.4% in China's domestic market, backed by bearish demand from the end-user Methyl Tert-Butyl Ether (MTBE) and allied industries, while sufficient material availability forces manufacturers to revise negative price quotations. Meanwhile, consumption of Raffinate from the overseas market has also remained on the weak side amid soft buying sentiments. In addition, feedstock Naphtha prices have also been dropping, easing the overall cost of production. Furthermore, the congestion has eased at key ports, and overall vessel utilization was low due to a slowdown in new orders. According to the National Bureau for Statistics (NBS), manufacturing activity has witnessed a steep fall, and Purchasing Manufacturing Index (PMI) plummeted from 48 to 47 in December. Thus, in conclusion, prices of Raffinate FOB Qingdao were offered at USD 760/MT during December.
Similarly, in the USA market, both domestically produced and imported Raffinate have been priced lower. The persistent drop in prices has been attributed to weak demand dynamics from downstream MTBE and other competitive industries, while material availability has remained robust owing to firm imports on the USA shores. According to the data, Purchasing Manufacturing Index (PMI) fell from 56.5 to 49.6 in December, implying a contraction in industrial and production activity. Hence, as a result, prices of Raffinate DDP Texas were offered at USD 660/MT with a declination of 7.4% during the same time frame.
On the other hand, Raffinate prices have dropped by 3% in the German market due to the abundant availability coupled with sluggish demand from the end-user industries amid season dullness. A sharp decline in the freight rates resulting in the cheap imported material from the Asian market weighed down the prices of Raffinate in the domestic market. In addition, domestic production cost has remained stagnant amid stable energy prices. On the other hand, inflation in the eurozone dropped by 10.1% to 9.2% in December compared with the previous month. Furthermore, cargo rates and volumes have continued to be soft, although the rate of contraction in transportation prices eased with the onset of the first quarter of 2023.
According to ChemAnalyst, "prices of Raffinate are projected to follow the bearish trend in the global market. The offtakes from the MTBE and other value chains are likely to remain sluggish, especially in the Q1 of 2023, due to macroeconomics headwinds, and pressure from Asian imports continues."