Nitrobenzene prices remained relatively stable in the first half of September 2024 largely driven by suppliers’ resistance to weakening demand as spreads widened in the first half of September 2024. Weakening of Nitrobenzene demand was driven by closure of derivative chemical plants in China amidst Autumn festivities and lower workdays planned. While the production situation did drop, higher stocks and unsold inventories carried over. The positive push for Nitrobenzene prices has diminished significantly as crude and naphtha prices for the past two months have remained historically lows.

In APAC markets led by China, consumption of Aniline dropped in September due to higher stocks and frequent outages in East China region due to heavy rains and flooding. The spot prices for the downstream Aniline dropped from USD 1310/MT to USD 1225/MT EXW Qingdao basis. The drop was aided by falling production of MDI as multiple plants have remained offline. However, spot prices of MDI were revised upwards as supply fell thus increasing premiums on stocks. The situation for MDI markets has therefore remained stable and price roll-over across FOB deliveries was observed. On the other hand, Nitrobenzene suppliers have been facing challenges of high Benzene costs, and downstream prices weakening has forced suppliers to hold their prices at FOB Shanghai price levels of USD 1555/MT in the beginning of the month. As the month progressed, spot quotations of Nitrobenzene were cumulatively revised downwards by the end of 20th September to USD 1530/MT, aided by falling benzene as well as Aniline prices. Yet the sales have not been picking up despite spot quotations going down, revealed a market participant. Geopolitical developments in the Middle East, European import demand for Chinese goods dropping and lower Chinese consumption. Producer prices indices for intermediate chemicals like Nitrobenzene remained lower than 100 due to weakening both supply as well as demand dynamics. On the other hand, heavy rainfall and logistical challenges in Indian markets, domestic supply fell and Indian markets undertook import of orders of Nitrobenzene from Korean markets, which were relatively lower than EX factory prices recorded at Vadodara by 5-7%, as per the latest government data.

For the next half of September, ChemAnalyst assessment has revealed that peaking of demand for domestic consumption of Nitrobenzene in APAC has been reached previously with domestic companies betting on their stocks. Furthermore, Nitrobenzene major supplier Wanhua brought its MDI plant online on 11^th September, aiding supply easing in the coming days for automotive as well as construction applications. Central bank of China dropped the reverse repo rate by 10 bp this week aiding consumption of chemicals and other manufacturing products, whose effect is yet to enter into the economy. Nitrobenzene prices to see a modest decline in prices further before turning bullish with improving margins and lowering of spreads as demand side picks up, especially for winter demand of insulating foams.