Asian Nitro Toluene Prices Stabilized in mid-August, a Recovery in September Anticipated

Nitro Toluene prices in Asia stabilized by the mid of August 2024 owing to moderate recovery in agrochemicals and stagnated demand from pharmaceuticals and dyes. The prices have been stagnant for the last five weeks due to markets observing fewer trading sessions as global TDI and polyurethane markets have remained saturated with unsold inventories.

The prices of Nitro Toluene have been stagnant in Asia owing to moderate and softer growth in agrochemical section while major drivers like dyes/colorants were weaker due to lower consumption throughout the season as consumer spending remained under stress especially in China and South Korea. Toluene (upstream raw material of Nitro Toluene) spot prices eased by 4.2% over the past four weeks due to weak demand concerns and elevated interest rates. Challenges in dyes and colorants as well as softening of pharma sector due to higher capacities has kept the market relatively bearish. On the other hand, Chinese consumption of active Nitro Toluene intermediates for agrochemicals increased as more downstream producers have been coming online. The cost pressure due to Nitro Toluene prices on TDI prices have been visible as APAC FOB Qingdao bound prices have fallen to as low as USD 1730/MT early in August, then recovering by mid-August due to strategic downturns and easing supply. The oversupply and production of TDI commensurate to falling construction demand in Korea and China continues to weigh on the prices of Nitro Toluene in the two nations.

Assessing the situation, inquiries with the market participant revealed that export markets of India remained subdued due to unfavorable shipping conditions, and lower overseas demand has kept the dyes driven textile markets in downturn for the past fourteen months. The latest prices assessed by ChemAnalyst on the week ending on 16th August FOB Qingdao USD 2010/MT. Nitro Toluene supplies to dyes manufacturers, remained ample but at higher costs, revealed a market player. The spread margins, according to the player, for dyes have reduced drastically that MSME dyes producers across the Western Belt in India have been facing severe financial stress. Nitro Toluene products from intermediates passed their prices to the downstream, while Indian consumers on the hand have been keeping their expenditure in check due to weak rural demand. Regional headwinds for textiles while geopolitically induced tailwinds for Chemical intermediates have continued to hurt the Indian producers.

ChemAnalyst has forecast for a bullish trend in Nitro Toluene prices as more ships return to the Indian ocean for pre-fall deliveries to Europe and North America. The Indian markets have been preparing for stronger trade season as sources revealed that peaking of prices and additional surcharges could be applied as early as September.