MDI
Updated to Q1 2020

Asia

MDI supply was mixed in Q1, with cargoes in short availability ahead of the Lunar New Year period when buyers based in locations such as China, Taiwan, and parts of southeast Asia were actively buying to stock up. However, following the coronavirus spread and the subsequent crude futures plunge, cargo availability turned ample in the region. There were limited planned turnarounds for MDI in Q1.

Cargo uptake for both monomeric and polymeric MDI slowed down in Q1, as bearish factors weighed heavily on buying sentiment. The coronavirus pandemic, plunging crude futures and weakened buyers’ confidence came together to curtail demand. In key market China, buyers preferred to adhere to buying cargoes locally amid sufficient stocks. Most buyers kept procurement on a need-to basis to prevent potential losses should market conditions deteriorate further.

Europe

Producer Covestro commenced output from its Brunsbuettel expansion, adding to existing oversupplied conditions. Late into the quarter, BASF commenced maintenance at its Antwerp plant in Belgium, the biggest in the region, and there were unconfirmed reports that Huntsman reduced output of some MDI products from its Rozenburg plant in the Netherlands. As demand dwindled amid the onset of the pandemic through Q1, Borsodchem reduced run rates at its plant in Kazincbarcika, Hungary, and cancellations of imported volumes were seen.

While some seasonal improvement was seen in MDI demand in Europe early in Q1, the market remained subdued. MDI used in construction applications benefitted from an unusually warm winter and elevated demand in some areas. However, ongoing weakness in the automotive sector reduced overall demand, particularly as much of the industry closed late in the quarter as governments in the region moved to contain the spread of the coronavirus.

Middle East

Supply was ample at the beginning. However, with the outbreak of the coronavirus in China, there were problems in shipping it to the Middle East regions. More measures were taken later and cargoes were delayed as every procedure took longer than usual. Some market players also said a main producer had some issue with its plants.

Demand was good at the beginning of Q1 but with the outbreak of the coronavirus, the market turned muted, with no discussions. Some downstream users either lowered their operating rates or shut down their plants to deal with the virus. There was no demand at all in the last week of Q1.

US

Methylene diphenyl diisocyanate (MDI) availability was sufficient throughout the first quarter, with some indications that the market was getting a bit tighter relative to demand early in the quarter. Towards the end of the first quarter, the spread of the coronavirus and the measures put in place to counteract the virus weakened demand, leaving the market well-supplied.

MDI demand started the quarter on a steady to stronger note following a year of slower than expected demand growth in 2019. A mild winter spurred additional construction activity during the traditional slow season for construction. However, as the coronavirus outbreak spread to North America and measures were put in place to contain the spread later in the quarter, demand for MDI and polyurethane systems fell as economic activity slowed.

TDI
Updated to Q1 2020

Asia

Spot availability of TDI fell on the back of transportation woes brought about by the impact of the coronavirus spread on China’s export facilities. Port closures, limited manpower and insufficient storage space were some of the factors contributing to shortened supply in the region. As such, import material offered to markets such as southeast Asia and India were largely of other origins such as South Korea in the earlier part of the quarter.

Cargo uptake was heavily weighed on by dampened sentiment over the increasing global spread of the coronavirus. Many market players maintained a cautious approach, preferring to consume contractual volumes instead of seeking additional spot purchases. Towards the end of the first quarter, hefty slides in crude futures pushed the market into uncertainty, which saw some TDI buyers cancelling orders.

Europe

Europe’s toluene diisocyanate (TDI) market continued to face a structural oversupply in the first quarter of 2020. Availability remained ample even as producer BASF carried out maintenance at its Ludwigshafen site and Covestro reduced output, as depressed consumption continued and as imports more than compensated for any reductions in local volume. Later in the quarter some reductions in run rates were heard as coronavirus-related closures saw demand collapse.

Demand plummeted late in the first quarter as coronavirus controls led to the closure of much of the region’s flexible foam producers. This added to existing depressed demand resulting from ongoing weakness in the broader economy, trade tensions between the US and China and uncertainties around the impacts of Brexit. Bedding, furniture and automotive sales had almost completely stopped at the end of the quarter and only sales into the healthcare sector were seen.

Middle East

Supply remained constant with no turnaround or shutdowns heard. According to some sellers, margins were not so good. As a result, though market was a little tight, some kept their plants running constantly without increasing the operating rates.

Demand was increasing at the beginning of the year in a tight market especially when Chinese cargoes could not be shipped during the coronavirus outbreak. However, as the coronavirus spread in Middle East regions, many countries were locked down, and demand became muted.

US

The global toluene diisocyanate (TDI) market continued to face global supply length throughout the first quarter as capacity additions in recent years have been added at a faster rate than demand has risen. US plants were heard to be running at normal rates, keeping supply levels sufficient in the domestic market.

TDI demand was sluggish throughout the first quarter as automotive demand remains slower than anticipated. Furniture and bedding demand has also posted slower-than-expected growth in line with weaker GDP expansion. The outbreak of the coronavirus along with containment efforts later in the quarter further depressed demand.

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