Chemical profile: Europe TDI

USES
Toluene di-isocyanate (TDI) is mainly used in flexible polyurethane (PU) foam, which has outlets in upholstery, mattresses and automotive seats.

Other uses include rigid foams and adhesives, paints, concrete sealers, and as a crosslinking agent for nylon 6 and intermediates in PU coatings and elastomers.

SUPPLY/DEMAND
Demand from the main downstream bedding and furniture sectors in northwest Europe failed to meet expectations in 2014 and early 2015.

The reason for this is unclear, but it could be related to general uncertainty stemming from issues with the wider global economy.

Meanwhile, TDI supply has been increasing.

New TDI capacity in Europe includes two new 300,000-tonne units in Germany, one belonging to Bayer MaterialScience (BMS) in Dormagen and the other BASF in Ludwigshafen.

With the German majors’ new TDI plants comes restructuring and the closing of existing TDI capacity.

BMS has replaced 105,000 tonnes/year of capacity for its existing TDI and pilot operations at Dormagen.

BASF will also close its TDI production capacity in Schwarzheide in the eastern part of Germany when the new plant at Ludwigshafen is operational.

According to ICIS Consulting, new net capacities of close to 1m tonnes of TDI are expected to come online by 2019, with 80,000 tonnes of this in Europe, the Middle East and Africa.

This represents a net increase of 450,000 tonnes from 2012.

While older capacity in Germany and Poland is being closed or repurposed, this substantial increase means that a market oversupply is expected for a number of years.

While global demand growth is expected to reach 3.5% per year for the next five years, regions such as Europe are likely to see growth reaching around the GDP level at best, in line with consumer spending trends in bedding, furniture and transportation.

PRICES
Following several months of relative stability during summer 2014, September TDI prices rolled over into October, at an average of €2,000/tonne FD W Europe, before dropping each month to an average €1,775/tonne FD in March.

April saw TDI prices assessed by ICIS at a €30/tonne hike from the previous month on the back of both the March toluene feedstock price hike, and recent unconfirmed issues at a couple of producers’ plants.

Nevertheless, with some market participants having reported lower-than-expected demand for TDI, not all suppliers were able to achieve April price hikes to the extent originally targeted.

Producers cited outcomes ranging from increases of €10/tonne up to €100/tonne from March levels.

TECHNOLOGY
The main route is the nitration of toluene to dinitrotoluene, followed by catalytic hydrogenation to toluene diamine (TDA), which is dissolved in an inert solvent and reacted with phosgene to produce a crude TDI solution. TDI can also be produced directly from dinitrotoluene by liquid phase carbonylation with o-dichlorobenzene.

Germany’s Bayer MaterialScience (BMS) developed a route that carries out phosgenation in the gas rather than the liquid phase. The technology was already commercialized at its world-scale 250,000 tonne/year TDI plant in Shanghai, China.

BMS has also been running a 30,000 tonne/year pilot plant since 2004 and is thought to have used this technology in its new 300,000 tonne/year TDI plant in Dormagen, Germany, which came onstream in late 2014.

OUTLOOK
Expectations earlier this year were for the TDI market to be well supplied in 2015, with further lengthening possible in light of new capacities coming on stream and flat demand in northwest Europe.

However the aforementioned unconfirmed production issues at a couple of plants in the spring tightened the market slightly, and helped support producers’ attempts to raise prices in April.

As previously mentioned, TDI demand failing to meet expectations meant that many suppliers were unable to achieve April price hikes to the extent originally targeted. It is therefore likely that May might see them try again, when it is hoped that demand for TDI will be stronger and better support further price hikes.

In terms of supply, Germany-headquartered BASF’s new 300,000 tonne/year toluene diisocyanate TDI plant at Ludwigshafen expected to start production in the second half of the year, the CEO of the chemicals producer said on 27 February.