Para-aminophenol, an essential chemical intermediate widely used in various industries, including pharmaceuticals, agrochemicals, and dyes, has seen a dramatic surge in prices across global markets in May 2024. Para-aminophenol versatile compound finds applications in the production of Paracetamol, azo dyes, and rubber antioxidants, making it a critical raw material for numerous manufacturing sectors. The price hike has been driven by a confluence of factors, including supply chain disruptions, increased demand, and escalating raw material costs. A supply crunch, exacerbated by geopolitical tensions and trade barriers, has constrained the availability of Para-aminophenol, leading to a shortage and subsequent price escalation. Simultaneously, surging freight costs and logistical challenges have further compounded the situation, adding to the overall cost burden for manufacturers and importers.

In the Chinese market, a substantial surge in Para-aminophenol prices was observed throughout May. This increase in Para-aminophenol was largely driven by the appreciation of the Chinese yuan against the US dollar, which created an attractive arbitrage opportunity for Chinese exporters. However, geopolitical tensions resulted in a scarcity of cargoes, disrupting trade flows and adding to the supply constraints. The Chinese market also experienced a significant uptick in inquiries for Para-aminophenol from both domestic and international markets, which put additional upward pressure on prices. Compounding these issues, China’s official Manufacturing Purchasing Managers' Index (PMI) for May 2024 contracted to 49.5, raising concerns about the country’s economic growth prospects.

In addition to the currency fluctuations and geopolitical tensions, the prices of raw materials of Para-aminophenol in China, especially Phenol, saw an increase due to rising Benzene prices driven by strengthening international crude oil prices. Reports indicated a surge in demand from the Chinese market and improvements in the terminal market, with market participants stocking up inventories in anticipation of growth in the construction and automotive sectors. The seasonal increase in global crude oil demand, extended OPEC+ production cuts, and geopolitical conflicts are expected to further influence Phenol prices. This week, Phenol prices in China were notably high, supported by escalated Benzene prices which simultaneously impacted the Para-aminophenol market. Manufacturing firms operated sufficiently, with most transactions involving small orders, and companies like Jiangsu Ruiheng New Material Technology Co., Ltd. operated at reduced rates. Oil prices gained some support in May ahead of the OPEC+ meeting in June, although economic uncertainty in China and record-high US production continued to impact the market. No significant supply-chain constraints were observed post-May Day Holidays.

Additionally, China's official Manufacturing Purchasing Managers' Index (PMI) for May 2024 contracted to 49.5, raising concerns about the country's economic growth prospects and potentially impacting domestic demand for chemical intermediates like Para-aminophenol.

Major Para-aminophenol importing regions like the UAE and US have seen a recent price surge due to increased costs from exporting nations like China coupled with global supply chain disruptions leading to higher shipping costs. The US market, reliant on Chinese exports, has been directly hit by rising prices. Supply constraints like the Panama Canal drought and reduced vessel traffic have limited capacity and driven up transportation expenses. Soaring freight rates, container scarcity, and longer lead times have created challenges for importers.