Rotterdam (The Netherlands):The first quarter of the fiscal year 2024-2025 witnessed a positive turnaround for the Nitrobenzene market in both North America and Europe. This upswing followed a weak Q4 impacted by economic downturns and high energy costs. This report analyzes the key factors contributing to the market recovery in each region, along with potential challenges to consider moving forward.

Nitrobenzene prices in North America experienced a significant rise in Q1 FY24-25. This can be attributed to a confluence of factors. Firstly, energy and gas supply contracts saw a cooling-off period, with lower premiums offered compared to historical averages. Abundant gas inventories in the spot market further reduced production costs for Nitrobenzene manufacturers. Pricing insights and data from the US reveal significant improvement in prices observed from January as benzene supply contracts turned higher by 5% Q-o-Q basis with spot prices recovering after downturns in industrial production eased by February as temperatures rose. The North American Nitrobenzene market is primarily domestic, with Korea being the major supplier from overseas. Huntsman’s major plant in the US ramped up production during the quarter, further influencing market dynamics. The easing of downturns in MDI production led to new orders for isocyanates in North America, indicating reviving demand for Nitrobenzene, a key raw material.

Similar to North America, Nitrobenzene prices in Europe also exhibited a strong recovery in Q1 FY24-25. The factors driving this upswing mirrored those seen in North America – reduced energy supply premiums and ample gas inventories leading to lower production costs. Unlike North America, the European market relies heavily on imports for Nitrobenzene, with Japan, Korea, and the US being the key suppliers. Huntsman's major plant in the UK also contributed to the regional supply. With England leading the way, countries like the Netherlands, Italy, and France implemented discounted mortgage programs to bolster their construction sectors. While demand for construction chemicals like Polyurethanes remained below historical averages, there was a noticeable decline in pending orders, indicating a potential rise in future demand for Nitrobenzene.

The latest price for Nitrobenzene in Japan, as of the previous quarter's end, was USD 1530/MT CFR Kobe. This reflects a strong market, with prices surging due to a bullish trend across Japan. Notably, high Nitrobenzene prices led to significantly higher Aniline contract prices. Consequently, Asian suppliers in East Asia opted for spot purchases instead of contracts, causing major price drops and frequent adjustments for both Nitrobenzene and Aniline.

While the overall outlook for the Nitrobenzene market appears promising, there are some uncertainties to consider. The upcoming off-season for shipping is expected to lead to inventory pressure in both domestic and export markets in both regions. The possibility of rate cuts and adjustments in market practices could cause price fluctuations in the future. Despite these challenges, the easing of energy concerns and a rise in demand suggest a potentially stable Nitrobenzene market in the near future. Manufacturers and other stakeholders should closely monitor inventory levels, shipping schedules, and potential rate adjustments to navigate these potential headwinds and capitalize on the recovering market conditions.