European O-Xylene Prices Decline Amid Weak Demand and Tight Supply in Mid-July 2024
- 17-Jul-2024 5:10 PM
- Journalist: Xiang Hong
Hamburg, (Germany): OrthO-Xylene (O-Xylene) prices have remained on a soft note across the European market during the second week of July 2024 amid a pessimistic demand picture. However, the availability of O-Xylene was tight amid reduced import availability as a result of rising freight rates, reflecting the strain of supply-demand imbalances.
As per ChemAnalyst, prices of O-Xylene witnessed a declination of USD 50/MT weekly in the German domestic market. The demand for O-Xylene from the downstream Phthalic anhydride industry has been muted in the domestic market as the demand from the key end-user construction sector was below seasonal expectations which weighed down the prices of O-Xylene in the domestic market. Also, the fewer number of inquiries and low requests make it more challenging for converters to smoothly sell their end products, which in turn reduces their purchasing volumes.
As per the market sources, the German construction Purchasing Manager Index has remained below the threshold point (i.e., 50) in June, reflecting a steep decline in the construction sector. Total activity and new orders experienced their smallest declines in 10 and 16 months, respectively, while firms were the least doubtful about the future. Intense competition among suppliers also drove down input costs. The decline in housing activity eased significantly in June but remained the weakest-performing sector. Meanwhile, the contraction rates for commercial and civil engineering activities remained mostly unchanged from the previous month, both being slightly slower than the total industry average. Thus, prices of O-Xylene CFR Hamburg were settled at USD 1280/MT during the week ending 12th July.
However, operating rates in the exporting market have remained under pressure in the backdrop of weak global demand, as a result, the supply of O-Xylene was restricted in both domestic and international markets. On the other hand, container shipping costs from South Korea to Europe improved for the second consecutive month in June owing to extended tensions surrounding the Red Sea. As per the market sources, the average shipping cost for a 40-foot container from Korea to the European Union region increased 44.6 percent monthly while 121.6 percent yearly, to 6.14 million won ($4,444) in June. Overall, persistent weakness in derivative demand has dominated the market of O-Xylene.
In the short term, ChemAnalyst anticipates o-xylene prices are expected to fall in the European region in the hope of further ease in demand from the downstream derivative industry. However, material availability might remain tight amid reduced import offers but it may minimally impact the prices of O-Xylene in the regional market.