Nitrochlorobenzene to be highly centralized after 2021, production stoppage of primary manufacturers results in price rise

Nitrochlorobenzene is an important organic chemical material and intermediate, which backs up production of large variety of derivative fine chemicals.

Nitrochlorobenzene is used to produce chemicals such as phenylenediamine, o-phenylenediamine, chlorofluoroaniline, p-aminophenol, p-aminodiphenyl amine, p-Anisidine and 3,3-dichlorobenzidine, being widely used in dye, pigment, spice, pesticide, medicine, painting, rubber, plastics and papermaking-related induetries. Among them, dye, pigment and medicine are the main area of applications of nitrochlorobenzene, which account for roughly 70% demand in total.

The global nitrochlorobenzene production capacity is mainly concentrated in mainland China, from which international buyer are importing. The production of nitrochlorobenzene in China is highly centralized, which is produced by about 10 manufacturers, mainly including Bayi Chemical, Guangxin Co., Ltd, Yangnong Chemical and Nanjing Chemical. Among them, Bayi Chemical is the largest nitrochlorobenzene producer in China and the world, with an annual capacity of 320,000 tons, accounting for above 40% of the total production capacity in the world.

The development of nitrochlorobenzene industry in China has a direct impact on the supply and the price level of nitrochlorobenzene in the world market. In October 2020, the application for extension of the work safety license filed by Bayi Chemical was rejected. As a result, its production was suspended in November. On the other side, the new plant of Bayi Chemical is still under construction, which is expected to be brought on stream, at the soonest, by the end of 2021, knowing that its first phase capacity is only 180,000 tons. Between November 2020 and the end of 2021, the production of the world's largest nitrochlorobenzene producer is totally suspended, which results in an unbalanced supply and demand situation in the global nitrochlorobenzene market. Therefore, the price of nitrochlorobenzene will continue to run at a high level to maintain a hot market. 

Industry analysts said that the global market demand for nitrochlorobenzene is relatively stable. After 2022, if the new nitrochlorobenzene capacity of Bayi Chemical can be put into operation smoothly, the imbalance between supply and demand in the global nitrochlorobenzene market will be relieved to a certain extent. However, as its new capacity is smaller than the original capacity, it is expected that the global supply of nitrochlorobenzene will still remain short in the next two years, which will create a new round of industry booming.