Rising Downstream Demand Impacts Nitro Benzene Prices in South Korea

The prices of Nitro Benzene increased due to a rise in the production costs and fluctuation in the cost of feedstock Benzene in the South Korean market. This situation positively affects the profit margins of Nitro Benzene manufacturers, as noted by traders. The availability of these raw materials plays a crucial role in determining the overall costs and profitability of the industry. Data from April indicates that South Korea's Purchasing Manufacturing Index improved to 48.1. According to Statistics Korea, the Consumer Price Index showed a 3.7% increase in April. These factors contribute to the price pressure faced by the Nitro Benzene market.

As a result, the market value of Nitro Benzene has increased in the South Korean market, reaching USD 1375/ton FOB Busan, based on available data on ChemAnalyst. South Korea's economy returned to positive growth in the Q2 of 2023, albeit the expansion rate remains moderate at 0.3% quarter on quarter basis. This positive GDP resumption is a significant development in early 2023. Moreover, South Korea's Korea Electric Power Corporation has incurred losses due to pressure to limit power bill hikes, leading to a 5.3% increase in power prices, alongside rising gas prices.

The logistics industry faces challenges as freight charges from East Asia to Europe and the North America East Coast have increased. This rise in charges is correlated with the increasing prices of Nitro Benzene. In order to tackle these challenges, the South Korean government has announced a series of new initiatives aimed at supporting and investing in the domestic shipbuilding industry.

The elevated downstream manufacturing of oil, dyes, drugs, and pesticides has impacted the inventory level of Nitro Benzene. Traders and suppliers have been affected by this situation. Moreover, the procurement of feedstock Benzene for downstream manufacturing processes, such as Styrene and Maleic Anhydride, has remained moderate in both domestic and overseas markets. This factor further contributes to the cost implications for Nitro Benzene. Merchants have observed increased inquiries for Nitro Benzene, especially from the recovering automotive and construction industries, which indicates a positive market performance in these downstream sectors.