Positive sentiments boosted Para-Phenylene Diamine (PPD) prices in Asian and North American markets

Busan, South Korea: During June 2024, the Para-Phenylene Diamine (PPD) market witnessed an incline in its trend. The incline in its trend can be associated with increased production cost of the PPD due to the surge in the prices of the feedstock Aniline and Nitrobenzene markets. Furthermore, the bullish market sentiments of PPD was also driven by the increased freight charges due to the supply chain disruptions.

The Chinese and South Korean PPD markets experienced an upward trend influenced by supply chain disruptions. In China, despite weak performance of the downstream automotive sector, the PPD market remained bullish due to rising overseas demand and ongoing supply chain issues. According to the China Association of Automobile Manufacturers, domestic car sales fell 7.4% year-over-year to 1.8 million units, while exports surged 29% to 400,000 units. For the first half of the year, exports increased by 31.5%, and domestic sales grew by 1.6%. Although China's electric vehicles have garnered significant attention, the export growth was primarily driven by gasoline-powered vehicles, which rose by 36%, comprising 78% of vehicle exports. EV exports declined by 2.3%, while hybrid vehicle exports saw a substantial 180% increase from a smaller base. Exports offset weaker domestic sales of gasoline vehicles as the market stagnated, with buyers shifting towards electric and hybrid models. Additionally, the bullish market sentiments were bolstered by supply chain disruptions caused by heavy floods from torrential rains on June 17th and the Dragon Boat Festival in early June.

Similarly, the South Korean PPD market also experienced an upward trend. Despite weaker domestic demand for PPD from the automotive sector, constrained supply and increased export activity supported higher prices for PPD. New vehicle sales in the downstream sector decreased by 16.4% year-over-year to 111,851 units. Although domestic demand was sluggish, exports showed an upward trend, especially in the US, where car exports surged by 29.8% to USD 18.45 billion. Conversely, exports to the European Union dropped by 30%, while those to the Middle East and Latin America fell by 18.7% and 8.3%, respectively. Shipments of hybrid and internal combustion engine vehicles increased by 19.5% and 7.2%, respectively, while electric vehicle exports declined by 17.5%. Overall, overseas sales in June rose by 5.1% to $57.07 billion, while imports fell by 7.5% to $49.07 billion, according to the Korea Customs Service. However, the market faced supply-side disruptions. Inventory levels of PPD were insufficient to meet the rising demand from the overseas downstream sector. Additionally, cost pressures were exacerbated by the weakening exchange rate and increasing raw material prices, leading to higher operating expenses.Furthermore, port congestion led to higher freight charges, contributing to the overall market scenario for PPD. Consequently, market players adjusted their ex-quotations to reflect the current market conditions and enhance their marginal profits.

In the US market, the PPD market witnessed an upward trend, primarily driven by increased production costs due to a surge in feedstock Aniline and Nitrobenzene prices. However, the downstream automotive sector faced significant challenges. Dealers struggled with the aftermath of cyberattacks on the software provider CDK Global on June 19, which disrupted critical sales and client management tools. According to the National Automobile Dealers Association (NADA), sales in June 2024 experienced a notable decline, with a Seasonally Adjusted Annual Rate (SAAR) of 15.3 million units, marking a 4.8% decrease year-over-year and a 4% drop from May 2024. Despite this potential negative impact on the commodity, the PPD market inclined due to disrupted trade inflows from China to the US. This disruption was initially caused by a 3-day festival, followed by severe floods in China and a hurricane in the US, leading to a disrupted supply chain and increased freight charges. These factors collectively contributed to the upward trend in the PPD market during the month. Additionally, regarding economic indicators, the US Manufacturing PMI increased in June 2024 compared to May 2024, remaining above the threshold and indicating an improvement in the manufacturing sector.

According to ChemAnalyst, the PPD market is expected to continue its upward trend. In the US, the automotive sales delayed by the cyberattack on CDK software are anticipated to recover in July 2024. Additionally, ongoing supply chain disruptions caused by torrential rains and floods are likely to create a bullish market scenario for PPD.