How Effectual Demand and Crude Oil prices Driving the Nitro Benzene Market in the Asia-Pacific Region
- 18-Apr-2022 6:22 PM
- Journalist: Yage Kwon
Nitro Benzene prices have witnessed a consistent upward trajectory from 18th March to the first week of April in the Asian region. The key factors behind the price hike were soaring Crude oil, a steep rebound in demand for the product, and disruption caused by the COVID outbreak in China.
Nitro Benzene is an aromatic compound derived from Benzene which is the derivative of crude oil. The conflict in the Eastern European region between Russia and Ukraine constrained the supply of crude to various countries and resulted in high upstream crude values. The high upstream values have been affecting the output and prices of feedstock Benzene, which has directly influenced the Nitro Benzene market in the Asia-Pacific region. Furthermore, rising petrol and diesel prices in the Asia-Pacific region have significantly impacted shipping, rail, road, and air freight charges, further pushing up the Nitro Benzene costs for the past 15 days.
The rampaging spread of the Omicron variant of Coronavirus has prompted a shutdown in China with strict lockdown restrictions. The phased closure of China's business and industrial hub, Shanghai, has delayed the transport of Nitro Benzene, which has led to a rise in its prices. As on 1st April, the prices of Nitro Benzene in China settled at USD 1335 per MT FOB Shanghai.
Around 98% Nitro Benzene is primarily used in the production of Aniline, which serves as a raw material in the manufacture of fungicides, pharmaceuticals, and polyurethane. According to ChemAnalyst, "An anticipated ease in lockdown measures may stabilize the Nitro Benzene’s supply in the domestic market. However, if the closure of Shanghai port continues, it can lead to extended port congestion, which might cause a delay in trade, affecting the regional and international markets. In addition, upstream crude prices are not expected to ease, which could negatively impact the production of Nitro Benzene in Asia."