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Improving Demand Conditions Increase Cyclohexane Prices in Dutch Market
Improving Demand Conditions Increase Cyclohexane Prices in Dutch Market

Improving Demand Conditions Increase Cyclohexane Prices in Dutch Market

  • 05-Jun-2024 2:39 PM
  • Journalist: Patricia Jose Perez

In May 2024, Cyclohexane prices rose by around 1% in the Dutch market, despite a roughly 3% decrease in the prices of its feedstock, Benzene, during the same period.

The surge in Cyclohexane prices in the Dutch market was mainly driven by increased construction activity, particularly for temporary housing, due to the ongoing housing crisis in the Netherlands. This boosted the demand for Cyclohexane from downstream industries like paints and coatings. Additionally, as the 2024 EU elections approached, there were noticeable improvements in commercial construction activities.

Housing associations are anticipated to commence construction of numerous low to mid-range rental homes, making it more financially and logistically feasible for corporations to undertake large construction projects. This is expected to further intensify the demand for Cyclohexane as demand from downstream paints and coating industries increased. Furthermore, adjustments to corporate tax in the favour of corporations and an annual allocation of 500 million euros for rent allowance are expected to bolster construction activities. Data from CBS Netherlands revealed a shortage of an estimated 390,000 homes in the Netherlands last year, maintaining housing as a primary government focus, especially with the election season looming. Additionally, there are expectations for improvements in public transport, particularly in rural areas of the Netherlands, and the commencement of construction on a train link between Groningen and Lelystad, further increasing demand for Cyclohexane from downstream paints and coating industries.

Moreover, disruptions in the supply chain occurred in mid-May due to severe floods across the Netherlands, leading to increased transportation costs and delivery lead times. In southern Germany, up to 300 mm of rain caused dam bursts and village evacuations, with flood warnings in place along rivers flowing towards the Netherlands, resulting production loses of Cyclohexane in Netherlands and increment in the lead time for deliveries.

Regarding manufacturing operations, the Dutch manufacturing sector saw an acceleration in growth during May, marking a significant step towards ending the preceding year-and-a-half-long downturn. Despite this positive momentum, manufacturers exhibited caution in their purchasing activity, which remained stagnant during the month, as well as in their management of stock levels. May witnessed a notable increase in cost pressures, prompting companies to once again raise selling prices. This adjustment may contribute to further fluctuations in the prices of Cyclohexane.

Overall, Cyclohexane prices across Europe are projected to rise in the coming months due to supply constraints, exacerbated by heightened construction activities, which are expected to strain downstream paints and coating industries. Support to the Dutch Cyclohexane prices is further anticipated from the expected increments in the prices of feedstock Benzene as demand for Styrene increases due to the improvements in the automotive industry across Europe.

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