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In Q4 2023, Subdued n-Hexane Demand Amidst Europe's Construction Slumps
In Q4 2023, Subdued n-Hexane Demand Amidst Europe's Construction Slumps

In Q4 2023, Subdued n-Hexane Demand Amidst Europe's Construction Slumps

  • 15-Dec-2023 12:00 PM
  • Journalist: Motoki Sasaki

Rotterdam (The Netherlands): For a major part of 2023, Europe has faced economic challenges, including a decline in economic activity, a worsening trade balance in chemical products, and the resulting impact on jobs and energy security. Therefore, the impact of these market dynamics has been imminent and quite dire on petrochemicals, including n-Hexane prices.

In Q4, particularly towards the second half, the price of n-hexane consistently dropped due to lower demand for downstream derivatives in the Netherlands, driven by decreasing crude oil and upstream prices. The global market has seen a continuous weakening of crude oil prices, reducing cost pressures on Heavy Aromatic naphtha and its derivatives. Purchasing managers' index data indicates ongoing contractions in the euro zone's construction and manufacturing sectors. The decrease in n-hexane prices during November was influenced by low construction activity and high-interest rates. Additionally, Huntsman Q3 results show the same price decrease, reflecting slowed construction activity and reduced demand in various industrial markets such as agrochemicals, coatings, adhesives, fuel, and lubes. Meanwhile, the demand of n-Hexane remained below par throughout the quarter and likely to remain so.

In November, the Manufacturing PMI in the Netherlands stayed below 50 for the fifteenth consecutive month, showing ongoing contraction. However, this contraction was the mildest since August, mainly because of lower consumer demand. The decline in both production and new orders persisted, causing job losses for the sixth consecutive month.

The demand for n-hexane in the Netherlands has dropped, mainly because of reduced demand from the construction sector, leading to a decline in the paint and coating industry. Thus, declined consumption rates from the solvents. The European Union's construction sector has experienced a year-on-year decrease in activity, a trend that started in the fourth quarter of 2022. The industry's slowdown is linked to higher prices for construction materials and labor shortages in some EU countries. Additionally, rising inflation and interest rate hikes have impacted the indicators. Investments in residential construction are decreasing, mainly because of higher interest rates on mortgage loans.

Throughout November, n-hexane prices in the Netherlands continued to show a downward trend. Information from various vendors indicated a decrease in the price of n-hexane in the country. In the initial week of November, the price stayed constant, but by the second week, it fell to USD 1452/MT FD Rotterdam from USD 1498/MT FD Rotterdam, marking a 3.07% reduction. Although the n-Hexane price remained unchanged in the third week, it dropped again in the fourth week to USD 1358/MT FD Rotterdam, representing a 4.6% reduction. ChemAnalyst predicts that worldwide, n-hexane prices will likely continue to decrease due to a decline in demand and destocking towards the end of the year.

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