o-Xylene Prices Continue to Exhibit an Upward Price Trend Across Asia and Europe

Prices of o-Xylene have continued their bullish rally across the Asian and European markets during the last week of January 2023. The major concern for the price increase was the improved demand dynamics and inadequate inventory levels. Meanwhile, inflation and production activity has improved in the European market.

According to the data, o-Xylene prices strengthened in the European market, supported by the drop in inventory level, while the procurements increased after the holidays. Feedstock Mixed Xylene prices were raised during the previous week, resulting in the high production cost of o-Xylene. On the other side, demand from the downstream phthalic anhydride, along with other competitive industries, has increased slightly due to the improvement in buying sentiments. Furthermore, ifo institute, a Munich- based economic researcher, reported that Europe's biggest economy, Germany, has seen an improvement in business outlook as recession fears recede. Moreover, inflation is seen at 6%, a drop in 2023 from the preceding anticipation, as energy prices alleviate following the initial shock of the energy crisis sparked by the Russia- Ukraine war. Thus, in Germany, prices of o-Xylene were settled at USD 1496/MT with a weekly increment of USD 21/MT during the week ending 27 January 2023.

Similarly, the rise in demand from the end-user phthalic anhydride and other derivative industries has impacted the market fundamental of o-Xylene in the Chinese market. On the other hand, the Spring Festival has hampered manufacturing activities across the nation. Meanwhile, logistics have yet to regain solely in some cities amid a labor shortage after the rollback of COVID containment measures, thus constraining the material available in the domestic market. In conclusion, o-Xylene prices raised by USD 20/MT during the fourth week of January 2023. As of the week ending 27 January, o-Xylene pricing for CFR Qingdao was assessed at USD 1014/MT. Although, overall shipment, particularly to China from South Korea's largest trading partner, dropped by 31.4% year-over-year in January in South Korea. The deterioration in the export rates has been attributed to high inflation, rising interest rates by the USA, and volatile energy prices.

According to ChemAnalyst, "Global o-Xylene prices are expected to grow in Asia and Europe due to further expectation of improving demand from the downstream phthalic anhydride industries. Meanwhile, feedstock Mixed Xylene prices are likely to increase, which may impact the production cost of o-Xylene in the forthcoming weeks. Although, the market participants are wary, as an intensification of Russia- Ukraine war could be a major threat and weaken the chemical and energy market in the near time".