Intermediates: Recovery for US isocyanates depends on construction

03 January 2011 00:00  [Source: ICB]

Construction and housing will shape the year ahead

If the housing and construction sectors recover to what some are calling the "new normal," US sales of polyurethane (PU) products will improve in 2011, and demand for the two key feedstocks - toluene di-isocyanate (TDI) and methyl di-p-phenylene isocyanate (MDI) - will gradually increase.

US demand for PUs weakened in the fourth quarter of 2010, but market participants expect higher growth rates in the year ahead.

Most players said business improved moderately last year, expressing satisfaction with an estimated growth rate of around 4-5% over 2009, which was generally described as a "dismal" year.

Some sectors performed surprisingly well. The spray polyurethane foam (SPF) sector was especially healthy, capturing market share from alternative insulation materials.

Automotive applications performed well with improved car sales late in the year.

Sales of PU roof replacement products grew during the summer on demand from repair work postponed during the worst of the recession, but board stock and wall paneling sales were soft, in line with slow new housing construction. Participants in flexible PUs also reported disappointment.

However, housing is expected to show renewed growth in the coming year. The National Association of Home Builders estimates that new housing starts rose marginally at about 8-9% in 2010, and projects increases of 37% in 2011 and 48% in 2012.

TDI and MDI prices in the US and the Americas were unchanged early last month on steady supply and demand, and they were expected to remain stable through year's end.

However, participants in the market report upward pressure from firm feedstocks, rising crude values and thinning margins, and they ­expect the pressure to continue into 2011.

Prices of TDI feedstock toluene, have crept up. US December/­January n-grade toluene traded at $3.12/gal on 14 December, up from $2.43/gal in early July.

By: Ron Coifman
+1 713 525 2653

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