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Trade disruptions in China amidst surging covid cases causing price instability in o-Xylene

Trade disruptions in China amidst surging covid cases causing price instability in o-Xylene

Trade disruptions in China amidst surging covid cases causing price instability in o-Xylene

  • 13-Apr-2022 5:13 PM
  • Journalist: Xiang Hong

As per the ChemAnalyst database, o-Xylene price witnessed an upward movement in the global market during the first week of April. The primary reason behind the price hike was a steep rebound in demand for the product, soaring Crude oil, and the disruption caused by the COVID outbreak in China.

China is the largest importer of o-Xylene from India and is one of the world's largest markets for civil aerospace and aviation services. The increased demand for o-Xylene from the aerospace industry for the manufacturing of lube oil drove the prices up in China. Furthermore, trade disruptions induced by the emergence of COVID, and the execution of the lockdown made it difficult for suppliers to maintain pricing stability. As a result, on April 1st, China's prices for o-Xylene settled at USD 1210 per MT for CFR Qingdao.

Meanwhile, rising global demand for Phthalic Anhydride (PA) strengthened the o-Xylene market, which is used primarily in the production of PA. o-Xylene is also used as a raw material to make plasticizers, polymer resins, bactericides, paints, etc. Hence, the expansion of end-use industries such as automotive, paint & coatings, and building and construction has boosted the demand for o-Xylene.

Surging upstream crude oil prices caused by the escalated tension between Russia and Ukraine had a severe impact on the o-Xylene pricing. This dampened the global market sentiments further, and injected uncertainty about the approaching prospect of oil and gas scarcity. According to the data, o-Xylene prices in Germany increased by roughly 1.7 percent over the previous week.

As per ChemAnalyst, "o-Xylene prices are expected to grow in the upcoming weeks as the upstream Crude price may rise. Robust demand for Phthalic Anhydride from the automotive and construction sectors might push up the o-Xylene values. The disruption caused by the conflict and the growing demand from end-use sectors could force the manufacturers to maintain a high trend in the prices."   

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