Hexene Market in Europe will Remain Bearish Amidst Weaker Demand
- 20-Dec-2022 1:53 PM
- Journalist: Gabreilla Figueroa
Frankfurt: Overall, the Hexene market in the European region has remained bearish since early December 2022. The market sentiments have been divided amongst the market participants, and the uncertainty in the European Hexene markets peaked in December. Since December started, the Hexene prices have dropped by 1.97% to 2.45%, despite the reduced operating rates at the manufacturing sites. At the same time, the Hexene demand from the downstream markets has remained dull, and there are no significant changes in the cumulative outlook.
Regarding the supply of Hexene, European domestic production facilities reduced their operating rates by considerable margins in the fourth quarter of 2022. The natural gas prices in Europe have consistently soared and are assessed at an all-time high, cumulatively impacting the production margins and costs for Hexene in the domestic market. Whereas the prevailing bearish outlook has mapped a significant drawdown in the cash flow that the European Hexene organization will avoid ahead of the year-end, as they will seek to improve the financial outlook for annual reports. Therefore, most market players across the value chain, including Hexene, decided to reduce the operating rates at the crackers except Austrian-based petrochemical and polymers giant Borealis.
In addition, the EU sanctions on Russian energy supplies have been implemented in full force, coupled with the price cap of USD 60 per barrel on Russian Crude Oil supplies. These new developments have weakened the enthusiasm amongst the market players. In contrast, the Crude Oil producing nations have attained a wait-and-see approach to sustain stability over the Crude Oil values. As they were proportionally anticipating considerable retaliatory measures by the Russian authorities.
Whereas in terms of demand from the downstream industries has remained dull as the performance of the Polymers industry improved but was insufficient to overcome from bearish outlook. As per a major market source, imported cargoes for the downstream Polyethylene have flooded the European markets, creating an oversupply scenario in the domestic market and enforcing the bearish pressure in the domestic market. As a ripple effect, the Hexene demand in the domestic market has dropped considerably, coupled with the curtailment of operations wave to sustain the production margins.
According to the ChemAnalyst Pricing Intelligence, the Hexene market in the European region will likely persist downward. At the same time, the Hexene market will consistently witness a similar trend in the first quarter of 2023. Although several market players firmly believe that the Hexene market will rebound by mid the first quarter of 2023. The market will witness considerable supply constraints amidst the reduced operations in China due to the holidays.