European Paraxylene Market Faces Downward Trend Amid Sluggish Market Dynamics

In the European Paraxylene market, the week ending May 17th, 2024, continued to show a declining trend. This was driven by falling costs in the upstream market of crude oil and Naphtha, which exerted increased pressure on Paraxylene prices. With the week ending on 17th May, Paraxylene prices in the British market experienced a nearly 1% reduction, settling at USD 1147/MT. This price decline can be attributed to several factors impacting both supply and demand within the market. The reduction in oil prices in the European market was influenced by investor expectations that persistent high U.S. inflation and interest rates would dampen consumer and industrial demand. Additionally, ongoing efforts to clear the shipping channel following the collapse of the Francis Scott Key Bridge contributed to market uncertainties.

Despite these disruptions, high inventory levels kept Paraxylene prices unaffected. The downstream market for Paraxylene, particularly PET (polyethylene terephthalate), remained static, leading to reduced demand from downstream industries and subsequently driving Paraxylene prices downward. PET markets have seen gradual softening during May due to weak demand. Buyers expect to receive further discounts during negotiations, which adds to their waiting stance. Even end buyers anticipate Paraxylene price reductions, contributing to the slow market offtakes. Throughout the week, the European Paraxylene market maintained ample supply, creating a balanced equilibrium between demand and supply, which supported the weak price trend. The Port of Baltimore played a significant role in U.S. trade, managing transactions worth USD 6.96 billion in April 2023. It accounted for 5% of all U.S. imports and around 4% of all U.S. exports during that month. Notably, 50% of this trade by value was either destined for or originated from Europe, while around 30% was linked to Asia. While traditional North European hubs continued to dominate, the emergence of the Port of Barcelona as a notable contender highlighted a shifting dynamic in regional trade routes. Barcelona's rise, offering shorter transit times for trades between the Far East and the Americas, underscores evolving trade patterns within the region. However, terminals in North Europe encountered line-up congestions due to adverse weather conditions, holiday port closures, and scheduling conflicts between services. Despite these challenges, key ports like Bremerhaven and Rotterdam maintained healthy yard density and operational efficiency, ensuring smooth operations amid logistical hurdles. Specifically, in Rotterdam, there is an anticipated reduction in reefer plugs from late June to late November, potentially disrupting refrigerated cargo handling during this period. These combined factors illustrate the intricate interplay of global events and local market conditions influencing Paraxylene prices.

According to ChemAnalyst, the prices of Paraxylene may continue to face downward pressure. The anticipated decline in prices is expected to rely less on the cost of upstream crude oil and Naphtha but more on the downstream PET (polyethylene terephthalate). Buyers are optimistic about obtaining better deals than in the previous month, anticipating additional price drops. Some market players believe there may be limited to no room for further decreases impacting Paraxylene prices. In contrast, others expect a stable to softer trend for the next month, with demand playing a crucial role in determining the future trend for Paraxylene. If crude oil prices do not recover from their earlier losses, the next commodity settlement may also be lower, reinforcing the downward pressure on Paraxylene prices.