November Sees US Nitrobenzene Prices Dip Amidst Sluggish Economy

Nitrobenzene prices turned bearish as US economic performance weakened, and the US Bureau of Labor Statistics released data in the second week of November 2023. The upstream feedstock benzene prices declined, followed by the downstream product Aniline, which turned bearish on the back of weakened retail sales and a weakened service sector. The US Energy Information Administration also revealed a significant rise in oil output to 13 million bbl./day in October, offsetting the supply cut of OPEC+ and leading to a stable oil supply in the markets.

Nitrobenzene is primarily used as the feedstock for preparing Methylene Diphenyl Isocyanate (MDI) in North American markets. Prices of MDI turned bearish after a brief bullish stint in October. Inquiries in the market revealed that the US polyurethane market continues to remain subdued as high-interest rates continue to bite the construction market through suppliers' and consumers' sides. In its Q3 results, Huntsman revealed that Nitrobenzene margins remained weaker, although they were better than Q3FY22 as feedstock prices deflated significantly in the given timeframe. Nitrobenzene upstream Nitration, charge, and benzene markets deflated to a 5% WoW basis in the second week of November 2023 as producers destocked excess inventories into the market. Nitric acid prices globally rose significantly because of El Nino year and elevated fertilizer demand from major Asian producers like the US, China, etc. Nitrobenzene inventories within the MDI value chain continue to remain overstocked in US markets, which are expected to be destocked in the coming weeks as more clarity is anticipated.

In Asian markets, Nitrobenzene prices turned stable in the second week of November on the back of the relaxing supply of Chinese volumes into the market, especially after overstocking the inventories. Inquiries with the market players in Chinese markets revealed that demand sentiment for Nitrobenzene turned bearish in East Asian markets as US economic data revealed weak economic recovery. Agrochemical industries reduced procurement orders for Nitrobenzene as supply relaxed in the given timeframe. Nitrobenzene upstream, like benzene, saw destocking activities in the market, with sellers offering lower quotes in the spot market. The downstream Aniline market remained stable, offset by higher demand observed from the pharmaceuticals and dyes market. Indian markets are currently heavily overstocked with Nitrobenzene as domestic capacities have improved, as revealed by a market player.

ChemAnalyst expects weaker prices of Nitrobenzene in November, which will be carried to December 2023, inducing a lagging effect on Aniline prices as pharmaceutical demand is expected to be weaker on the MoM basis. An offset of lower pharma demand by increased procurement for polyurethane foams is anticipated in North American markets by the end of November for Festive restocking and stabilizing prices in MDI markets. Oil markets may turn volatile as OPEC+ is expected to decide on cutting production, which is expected to provide more clarity in the coming weeks. At the same time, benzene restocking is being undertaken at elevated quantities in Asia and America.