Limited Natural Gas Supply is Hampering the Production of Cyclohexanone in Germany

Cyclohexanone prices have showcased a marginal uptrend in the German market. Shortage in Natural gas supply is the primary reason that backs up the increasing price trend. Moreover, the tight supply of the product and the soaring raw material prices have also contributed to the inclining costs.

The German market has been facing a continuous surge in raw material prices since the beginning of the Russia-Ukraine war. Russia cut the gas supply to the German market as a threat to shutter the industries. The gas supply reduction has affected the German market's production activities. Hence, the price of the raw materials increased amidst the declining Crude oil prices. Following the rising feedstock Cyclohexane values, the cost of Cyclohexanone began rising.

The gas supply shortage has severely affected the major consumer BASF SE, using gas in their entire production process. Though, the lack of gas has been affecting production activity. Thus the limited availability of the raw materials led to poor production of Cyclohexanone. Therefore, the insufficient availability of Cyclohexanone in the domestic market coupled with healthy demand for the downstream caprolactam, adipic acid, and other derivatives inflated the Cyclohexanone market. Henceforth, the price of Cyclohexanone grew by approximately 4% by the end of 22nd July.

Moreover, due to the healthy consumer consumption, the end-use automotive, textile, and construction sectors' demand for Cyclohexanone was high. The terminal side demand was also increasing. The export charges were also escalating due to healthy buying sentiments from the regional markets. Furthermore, the road freight charges are skyrocketing, adding pressure to the Cyclohexanone market growth.

As per the analysis by ChemAnalyst, "Cyclohexanone's market outlook will likely remain strong in the coming weeks. The expected winter gas crisis might worsen the pricing of Cyclohexanone. The reduction in gas supply through Nordstream may push up the raw material prices due to the poor availability of the product. Also, the road freight charges might remain strong due to the skyrocketing fuel prices.