FocusChina TDI plunge sends Asian sellers scurrying to other markets

13 July 2010 07:27  [Source: ICIS news]

By Ong Sheau Ling

SINGAPORE (ICIS news)--Asian toluene di-isocyanate (TDI) producers are scrambling to sell to other regions amid depressed prices in the important Chinese market, industry players said on Tuesday.

Spot TDI values in China fell a steep 23% from mid March to $2,400/tonne (€1,896/tonne) CFR (cost and freight) China Main Port (CMP)/Hong Kong due to oversupply.

Southeast Asian prices had also weakened, forcing regional sellers to look a little farther - towards the Middle Eastern and Latin American markets, where cargoes could be sold at up to $2,600-2,700/tonne, market sources said.

“The only way to relieve the supply glut is to find other outlets. Besides, China [TDI] price is the worse in the entire globe,” said a northeast Asian producer.

China TDI were being offered by producers at $2,400-2,500/tonne CFR China Main Port (CMP)/Hong Kong on Tuesday, while selling quotes from local traders were at a record low of $2,380/tonne CFR in south China (including Hong Kong).

“Business has been hard in China. The local supply deluge has really squeezed the import market to a minimum,” a south China-based importer said.

TDI sales in China were particularly bad in the past months due to the lull season in the downstream foam business, market sources said.

The material is used in the manufacture of polyurethane (PU) foams, which are used in various applications, including furniture and automobiles.

Faced with severe inventory pressure over the past few months, Chinese traders were also trying to re-export their stocks to other regions, they added.

China is a major market for TDI with total imports at 130,128 tonnes in 2009, while exports were at 4,980 tonnes, based on official statistics.

Its TDI imports continued to grow on a monthly basis this year until May, when imports fell a sharp 32% from April, whereas its exports surged 46% over the same period, due to a poor demand and plunging TDI prices, market sources said.

With more material being made available to neighbouring southeast Asia, prices in this region fell 19% from mid March, in line with values in the Chinese market, based on ICIS data.

“The southeast Asian market is losing its attractiveness as well,” said a regional producer, who added that he has been trying to sell product to the Middle East and Latin America in the meantime.

Korean producers were trying to compete in the Middle East market, with an offer of $2,600/tonne CFR last week, at least $200/tonne lower than European material.

Meanwhile, more offers were emerging from northeast Asian producers to Latin America, despite recent hikes in freight charges, but volumes were limited to a maximum of 100-150 tonnes, market players said. 

US-based suppliers maintained their offers to Latin America at $2,950/tonne CFR, higher than those from Asia, based on ICIS data.

Chinese sellers were eager to offer to the US, but they could not generate buying interest as they could only offer in drums, while the US-based foam-makers could only handle TDI in bulk, market sources said.

TDI makers in Asia include BASF, Bayer, KPX Fine Chemicals, OCI Chemical and Mitsui Chemicals.

With additional reporting Vera Huang, Ronald Coifman and Heidi Finch

($1 = €0.79)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connection
For more on toluene di-isocyanate, visit ICIS chemical intelligence
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By: Ong Sheau Ling
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