During the week ending January 23, the cyclohexanone market exhibited mixed regional trends. Throughout the US, prices held firm as balanced supply conditions, ample inventories and steady contract demand helped keep short-term volatility under control. On the other hand, the market in China experienced a moderate increase in pricing due to higher raw material expenses as well as a slight contraction in the spot supply of cyclohexanone caused by temporary shutdowns at manufacturing facilities for maintenance purposes. In addition, there was pre-holiday restocking activity that added to the upward pressure on pricing. In general, the market remained in a cautious state of mind with short-term pricing movements dictated more by cost characteristics and localized fluctuations in supply and demand than by any structural changes taking place within the cyclohexanone market.
Prices in the cyclohexanone market globally were mixed throughout the week ending January 23rd, prices remained stable in the United States but experienced a significant increase in the Chinese region. Both the support of increasing costs, changes in domestic supply chains and cautious purchasing activity from customers have allowed the cyclohexanone markets during this period to stabilize rather than show widespread volatility.
There was little fluctuation in cyclohexanone pricing within the United States during the previous week since many users asked participants to remain patient while trying to figure out whether prices would change, based on uncertain macroeconomic conditions and the existence of both Trade Policy Risk discussions ongoing. Participants observed that there were still adequate stocks available without major disruptions from production facilities, which allowed for some offsetting of continuous increasing or decreasing pricing pressures from upstream sources of Aromatics.
The Chinese cyclohexanone market saw an increase from the previous week of around 3.8%. This growth has sparked an increase in cyclohexanone prices due to increased feedstock prices. This increase in feedstock prices stemmed from an increase in benzene prices on the upstream side in the latter part of January. This cost support gave producers the ability to raise offers, especially in the eastern Chinese region where there was more market activity prior to the Lunar New Year.
China's supply-side conditions were also supporting cyclohexanone price increases. In the past few weeks, various regional producers have had to enter short-term maintenance periods, which resulted in a decrease in spot availability and a reduction in short-term supply pressure. Despite having access to sufficient overall capacity at this time, producers were able to work with lower overall operating rates, which provided them with greater bargaining power when negotiating cyclohexanone prices. Overall, demand for downstream products was being driven primarily by user demand; however, pre-holiday stocking has created additional support for the underlying fundamentals.
In the near future, the expectation is for stable cyclohexanone price levels based on fluctuations primarily influenced by raw material trends and post-holiday recovery of demand. However, it is unlikely that cyclohexanone prices will continue to trend upwards significantly given the current supply/demand balance. It is possible that periodic price increases may occur if feedstock costs and temporary supply tightness line up. Participants in the marketplace will also keep a close watch on feedstock trends, production levels, and downstream demand to help provide further direction for potential changes in cyclohexanone pricing during the post-holiday period.
