Global Hexene Prices Decline Amidst Lackluster Polyethylene Demand

The Hexene market continues to remain bearish in the second week of November 2023 despite rising uncertainty and elevated ethylene feedstock prices. Challenges pertaining to increased capacities of Hexene in the Chinese market continued trimming of major crackers in Europe, and increased supply of Hexene by the US still persist. Demand situation in the downstream Polyethylene market across the globe remained subdued as major sectors like construction and manufacturing continue to contract across the globe due to high interest rates and the rising debt burden of major economies.

In North American markets, markets turned further bearish after retail and inflation data for the month of October was released by the US government as retail sales fell after a spectacular rise in September. Data revealed that housing prices continued to cool off along with energy prices in October, providing relief to the consumers as demand declined compared to September, which was reflected in the falling prices of polyethylene and the upstream Hexene prices. US markets continued to destock the oversupply in the global markets. Braskem in Brazil faces stiff competition over Hexene supply in Latin American markets as Brazil’s energy and feedstock supply remains exorbitantly higher than US Hexene suppliers, leading to negative cash flows and weak financial positions, reflected in their Q3FY23. Inflation easing in the USA signifies, according to market experts, that demand is gradually reducing as the effect of rising interest rates is supported by anticipated El Nino induced effects in Southern regions of the USA.

In European polyethylene markets, Hexene demand remained subdued on the back of negative consumer sentiment, increased inventory stocks, and reduced supply due to the trimming of crackers in the Netherlands, Germany, etc. While prices continue to remain stable and marginally decline despite reducing imports from the USA and Saudi Arabia, market participants revealed that shipping industries reduced container supply and increased prices as major shipping industries are undergoing weaker financial positions due to lower trade volumes and rising energy and maintenance costs. Asian markets saw Chinese capacities coming online, dumping large volumes of Hexene in the regional market, while demand recovery in the Chinese market remained weaker than anticipated. Indian markets reduced their imports of finished polyethylene goods on a YoY basis, leading to higher inventories in Chinese domestic markets and creating a domino effect in the Hexene value chain of oversupply. The Indian construction sector has turned bearish since October, weakening the polyethylene market and affecting domestic Hexene demand.

ChemAnalyst anticipates a further decline in the prices of Hexene, provided the supply chain remains intact. Demand forecasters expect further Chinese recovery, albeit at a slower pace, to absorb the oversupply situation in the market. With Europe expecting warmer winters, further price relaxation of gas could provide better margins to Hexene and Polyethylene producers across the globe.