Stabilization of Asian Nitrotoluene Prices in August 2023: Implications for Upstream and Downstream Value Chains
Stabilization of Asian Nitrotoluene Prices in August 2023: Implications for Upstream and Downstream Value Chains

Stabilization of Asian Nitrotoluene Prices in August 2023: Implications for Upstream and Downstream Value Chains

  • 16-Aug-2023 12:03 PM
  • Journalist: Francis Stokes

Nitrotoluene prices seem to stabilize in August after a 'free fall' beginning in June 2023. Stabilization holds multiple consequences for both the upstream and the downstream value chains. Preliminary analysis has shown that the oversupply of the material in the Asian markets is the primary reason, as the inventory runs on the higher ends.

In the Chinese markets, p-Nitrotoluene prices stabilized at USD 1150 on a FOB basis by the beginning of August 2023. While the price of Toluene showed a rising trend since July, it almost approached the price of p-Nitrotoluene by the beginning of August 2023. Market experts and Supply chain managers in their inquiries revealed that the rising crude prices and the subsequent rise in the feedstock chain of Nitrotoluene showed that the feedstock inventories were at the lower end while the product p-Nitrotoluene inventories were on the higher ends. Supply Chain Managers concluded that large end-use inventories were left in the construction sector. Construction Business Activity data was reported around 51.2, with a decline from 55.7 as reported by CEIC and the National Bureau of Statistics. The drop in new home sales in China is the steepest in July 2023. Many Chinese real estate projects have been left unsold. A Financial analyst has reported that the Chinese National debt outpaced US and Europe in the period between 2014-2020 before the COVID-19 pandemic already led to the slowdown in the construction sector, which eventually culminated in the real estate bubble in 2022 as Evergrande collapsed. The prices of Nitrotoluene's entire value chain till the paints reflect a similar declining trend since July 2022.

The Japanese market showed a similar trend with a stabilization of prices similar to the Chinese markets, with p-Nitrotoluene closing towards the price of Toluene at USD  1085/MT FOB Osaka. In Japan's construction industry, market analysts have reported that the decline in demand is mainly due to declining demographic components rather than economic issues. Japan is likely to see an oversupply of 10 million homes in 2023. These Asian economies have significantly impacted the prices of Nitrotoluene in the Asia Pacific regions. The export-import situation shows that the oversupply of the product has led to the 'free fall' of Nitrotoluene prices in the Asia Pacific.

The Indian markets, on the other hand, stabilized the prices during the month of July itself. Multiple inquiries confirmed that the demand for paints, pigments, and dyes has remained stable and stronger while the toluene prices have been higher than the p-Nitrotoluene. Ex-Works Vadodra p-Nitrotoluene USD 869/MT.  India's construction sector is showing resilient growth as Q2 2023 new house sales with 1.15 lakh units with a minor increase than previous Q1 2023 as reported by ANAROCK. Manufacturers have reported that the feedstock inventory levels were adequate to serve the demands and hedge against the new costlier orders. Supply Chain Managers across the industrial domain have reported that the rising crude prices will have a minimal impact due to cheap Russian oil-derived petrochemical stocks being sufficient to cater the future demands.

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