AFPM '13: New MDI capacity could face delays: US Huntsman

25 March 2013 23:43  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--Delays in adding new capacity for methyl di-p-phenylene isocyanate (MDI) could be longer than what the market is expecting, the head of US-based Huntsman said on Monday.

Several companies have plans to add MDI capacity in China and the Middle East, as well as other parts in the world.

In all, the announcements represent about 44% of 2012 MDI capacity, according to a research note by Jefferies, released earlier in March.

If this new capacity is spread out over time, then the market can absorb it without a significant effect on utilisation rates, Jefferies said. Utilisation rates could fall if the new capacity is not added prudently.

However, MDI plants are complicated facilities, as they rely on multiple raw materials and use phosgene as a feedstock, said Peter Huntsman, the company's CEO.

Huntsman made his statements on the sidelines of the International Petrochemical Conference (IPC), held by the American Fuel & Petrochemical Manufacturers (AFPM).

Unlike crackers, MDI plants are often the last facilities to be added to a complex, he said. 

As a result, the new MDI capacity could start operations even later than the market is anticipating, Huntsman said.

Meanwhile, demand would continue to increase.

Huntsman and Jefferies both noted that MDI demand has typically grown by 7%/year.

Jefferies said MDI demand is growing because of share gains in insulation; because of the growing popularity of oriented strand board (OSB) over plywood; and because of MDI's increasing use in applications once reserved for toluene di-isocyanate (TDI).

The AFPM conference ends on Tuesday.

By: Al Greenwood
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