Weak Downstream Demand Declines the Cyclohexane Market in Q1 2023

During Q1 of 2023, the cost of Cyclohexane has witnessed a downward trend in the German market due to the weak demand from the downstream coating, construction, and other key driving factors. Consumer spending is declining as a result of consumers' ongoing anxiety about inflation and price increases, which has an effect on the state of the economy as a whole. The slowdown in purchasing activities has reduced the price movement of Cyclohexane in a negative direction. Increasing building costs, worsening financial conditions, and general customer concern due to the uncertain economic outlook all contributed to a substantial decline in new orders for Cyclohexane.

In January 2023, domestic and overseas orders of Cyclohexane followed a negative trend, and new orders from the Euro region declined due to uncertainty in the economy. The inflation rate in Germany was 8.7%, unchanged in February 2023 compared to the previous month. Since January 2023, the expansion in energy costs has been eased back somewhat by the power, petroleum gas, and district heating cost freezes, producing results reflectively as of January 2023. In February 2023, the rate of inflation remained at 7.6%, excluding the cost of energy. The European Central Bank (ECB) increased interest rates significantly by 50 basis points in late March 2023 in response to recent banking industry uncertainty, indicating its willingness to provide liquidity support to banks. Demand often declines as interest rates rise, which might hamper the petrochemical sector, including the Cyclohexane market.

According to the ChemAnalyst price monitoring, the cost of Cyclohexane hovered around USD 1290/MT on a FOB Nuremberg basis with a weekly declination of 0.7% during the last week of the first quarter of 2023.

It is expected that the Cyclohexane price is likely to decline in the coming week due to the slow market demand in the European region. Market analysts now anticipate a slight recovery in the German economy in the second half of the year.