European Hexene Prices Consolidate Gain in H2 of March 2024, As Demand Diminishes

Hamburg (Germany): Hexene prices recovered over the past month extending into March 2024, finally consolidating their gains in the last week of March 2024. Feedstock and raw material ethylene prices also observed a similar consolidation and stabilization in the given timeframe In the latter half, markets observed consolidations of gains, a fall in newer orders, and a rise in inventory stocks to significant levels. Market participants are bracing for the next quarter. With the beginning of April 2024, price revisions for Hexene showed an optimistic trend affected largely by lower deliveries from Middle Eastern markets for raw materials and feedstock.

In European markets, challenges pertaining to energy and feedstock pricing are settling down largely owing to weak global demand and the softer winter observed in FY23. European supply of gas remained stronger on a YoY basis in March 24, which supported price gains in Hexene over the past two months. Furthermore, seven month contraction in Hexene and other oligomer output in Europe, reached minimum inventory requirement by the end of FY23 pushed for increment in cracker utilization rates.

Two other factors contributed to the price fall of Hexene - Relaxing of Red Sea supply situation, increasing imports from US markets into Europe. ChemAnalyst assessed FOB Al Jubail and FD Hamburg of Hexene for the month of March and the early days of April. The assessment revealed that volume trade between Asia and Northern Europe has slowed down significantly with prices falling by 15% aggregate partially due to the beginning of the low shipping season and partially due to the shift of supply from Asia Northern Europe to Northern Europe Atlantic.

Cost support from ethylene remained firm, nevertheless observed in C2 pricing of US volumes. Korean suppliers of Hexene have begun to release volumes into Asian and European markets after holding for the past two weeks. Market intelligence suggests that Chinese capacities of LLDPE and HDPE are gradually coming online with improvement in manufacturing as PMI recorded expansion in March, affecting excess volumes of Hexene into Chinese markets rather than European as trade barriers between China and South Korean markets have been resolved for smoother delivery of chemicals.

ChemAnalyst retains the Hexene’s forecast for March and April as a bullish trend for Europe as inventory pressure increases on a yearly basis as Europe’s energy prices have deflated by 47% in FY23 over FY22 peak prices and cracker margins are showing improvement, downstream Polyethylene market to kickstart manufacturing in German market as inflation and mortgage rates continue to fall.

Seasonally adjusted raw materials and Hexene supply show tightening of the market in April-May-June as downturns diminish further in Hexene and ethylene markets. The macroeconomic framework shows strong demand after Ramadan, with European cracker margins currently sustainable to meet for demand. PMI expansion across major sections of the European Union indicates resilience in spending of consumers and falling mortgage rates as financial markets adjust the excess tightening for the past eighteen months.