European N-Hexane Market Faces Price Decline Amid Downstream Sluggishness
European N-Hexane Market Faces Price Decline Amid Downstream Sluggishness

European N-Hexane Market Faces Price Decline Amid Downstream Sluggishness

  • 28-Feb-2024 3:50 PM
  • Journalist: Rene Swann

Rotterdam (The Netherlands): In January 2024, the European market experienced a notable decrease in n-hexane prices, echoing the global trend observed in the World Food Price Index reported by the United Nations Food and Agriculture Organization (FAO). The FAO's index, reflecting declines in cereals, suggested subdued demand for n-hexane, particularly in the food processing sector. Contributing to this decline were factors such as low procurement activities and a reduction in production costs.

The latter was driven by falling upstream crude oil prices, a consequence of concerns over increased global supplies. This multifaceted downturn in n-hexane pricing underscored the challenges faced by the industrial solvent sector in Europe, highlighting the impact of global economic dynamics on regional markets. As the FAO emphasized factors like strong competition among wheat exporters affecting international prices, the European n-hexane market grappled with a complex interplay of global and regional factors influencing its pricing dynamics.

In the Netherlands, there was subdued buying enthusiasm, and demand from the downstream food processing sector remained low, mirroring the sluggish performance in European countries. The food sectors in the eurozone witnessed a significant decline in January, marking a sharp drop from December. Moreover, the petrochemical markets in Asia showed a varied trend leading up to the Lunar New Year holiday, suggesting a stagnant market atmosphere and a less positive industry outlook.

Moreover, India saw a 28% decline in vegetable oils in January and imported sunflower oil from Europe, impacting the downstream oil extraction industry and causing a decline in the price of n-hexane in Europe. Overall, this situation indicates challenges in the downstream and related sectors, impacting both the demand and pricing dynamics of n-hexane in the market globally.

The ongoing adoption of new production capacities in exporting nations across Asia, combined with sluggish demand growth and narrowing profit margins, is prompting petrochemical firms to contemplate the permanent closure of older facilities. Additionally, the Red Sea transportation crisis exacerbates economic challenges in the Netherlands, including recessionary conditions and high labor and energy expenses. Industries throughout Europe are grappling with escalating inflation and heightened interest rates within the eurozone. The German chemicals sector faces significant hurdles, with an 8% year-on-year decrease in production, signaling a limited potential for rapid recovery. Manufacturers maintained adequate stockpiles of n-hexane to fulfill demand, and the assessed price of n-hexane in January stood at USD 1115/MT FD Rotterdam, marking a 12.5% decline from the previous month.

After significant declines for the last two months, prices are anticipated to improve in the coming months as demand from the downstream sector improves and supply disruptions due to the Red Sea crisis may further increase prices, thus increasing the production cost of n-hexane.

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