Isocyanates prices, markets & analysis

MDI
Updated to Q1 2021

Asia

Cargo availability for both polymeric and monomeric MDI tightened on unforeseen production issues, in addition to the polar storms in the US which curtailed spot supply for Asia.

In the earlier part of Q1, cargo uptake saw a seasonal slowdown ahead of the Lunar New Year holiday. Demand was robust in the later part of the quarter, with rising prices prompting buyers to seek material more actively on concerns of further price hikes. Moreover, concerns over cargo availability resulted in panic buying among some buyers.

Europe

Tightness persisted in the Europe MDI market in Q1 and worsened in some cases as production issues impacted supply from domestic and US producers as a result of the US polar storm. Strong demand also continued to limit availability.

Demand for rigid foams remained robust in Q1 amid a continuation of strong performance in the construction sector. High demand was supported by government stimulus funds promoting construction programs and growth.

Middle East

Supply in Q1 was tight due to some maintenance shutdowns and plant issues. Spot availability to the Middle East were affected by high prices in Asian markets and high raw materials prices in Asia.

Demand improved at the start of the year due to stronger demand for polyurethane foam products but eventually tapered off as prices continued to increase sharply, leading to buyer fatigue and resistance to the rapidly increasing prices. Toward the end of the quarter, demand slowed considerably.

US

MDI supplies tightened during Q1 as the mid-February polar storm along the US Gulf Coast resulted in several MDI plants experiencing force majeures and at least temporary shutdowns. Ongoing chlorine and carbon monoxide shortages continued to keep average MDI operating rates limited while the polar storm also impacted other MDI feedstocks and intermediates such as benzene, aniline and nitrogen.

MDI demand remained strong throughout Q1 amid an ongoing manufacturing-driven expansion in US economic activity. An emerging trend of consumers moving away from urban areas and into suburban neighbourhoods has supported demand for applications in the automotive, appliance and construction sectors, keeping demand for PMDI strong. MMDI demand was a bit slower to recover from early 2020 lows, but was also showing solid rates of growth by Q1.

TDI
Updated to Q1 2021

Asia

TDI supply was tight in the first quarter following unforeseen events such as the polar storms in the US Gulf Coast, which cut production at some major US facilities. An unexpected shutdown at a Middle East facility led to decreased availability for exports to Asia as well, lending upward support to the spot market.

Demand for TDI was mixed, with cargo uptake slowing down ahead of the Lunar New Year holiday and picking up after the festivities. With supply shortening abruptly amid unexpected disruptions, buyers actively purchased material amid concerns of availability in the near term. However, with the related polyols market also registering steep price gains, some buyers struggled with increasing production cost pressure.

Europe

TDI supply was mixed in Q1 after the region’s largest producer, BASF, shut its Ludwigshafen plant in Germany in mid-March for maintenance after a three-month shutdown in late 2020. Outages at US plants following winter storms in mid-February and logistics issues further tightened supply.

TDI demand was relatively healthy in Q1 as the buying appetite for mattresses and furniture continued to beat expectations, spurred by a boom in home improvements linked to the coronavirus pandemic. In some cases, however, TDI demand was capped by limitations on polyether polyols supply, which constrained foam production. Automotive demand for flexible foams fluctuated.

Middle East

Supply in Q1 was tight due to some maintenance shutdowns and plant issues. Spot availability to the Middle East were affected by high prices in Asian markets and high raw materials prices in Asia.

Demand improved at the start of the year due to stronger demand for polyurethane foam products but eventually tapered off as prices continued to increase sharply, leading to buyer fatigue and resistance to the rapidly increasing prices. Toward the end of the quarter, demand slowed considerably.

US

TDI supplies tightened during Q1 as the mid-February winter storm along the US Gulf Coast impacted all US TDI production sites as well as creating shortages in availability of a number of feedstock and intermediate chemicals used in TDI production. Several TDI force majeures emerged following the winter storm as supplies tightened. Ongoing chlorine shortages have continued to impact average TDI operating rates.

TDI demand remained strong throughout Q1 amid an ongoing expansion in US manufacturing activity. Consumers have been allocating more of their disposable income to home improvements and consumer durable goods relative to travel and entertainment services as many consumers are spending more of their time at home due to ongoing coronavirus-related movement restrictions.

Regional Outlook

MDI
Updated to Q2 2021

Asia

Supply is expected to increase in Q2, as plants around the region recover from unforeseen issues and resume regular production. There are limited turnarounds planned in Q2, while no start-ups are expected either.

Buyers are expected to take a cautious stance, given price declines seen in the last few weeks of Q1. The related polyols market faced downward pressure as well from the upstream PO price declines. As such, buyers are expected to purchase largely on a need-to basis, although dwindled inventories would eventually require replenishing.

Europe

MDI supply is expected to remain under pressure in Q2, and suppliers around Europe are expected to face difficulties rebuilding depleted inventories. Global factors may also continue to limit imports and increase exports from Europe.

Construction activity is expected to increase going into Q2, as a result of conducive seasonal conditions and with support from government stimulus programs aimed at post-pandemic economic recovery. These factors would support strong demand for MDI in Q2.

Middle East

Supply is expected to increase especially from Asia as raw materials prices decrease and as netbacks to other regions also decline. There are limited known plant maintenance shutdowns expected among major suppliers in the quarter that could curb overall supply to the Middle East.

The start of the Muslim fasting month of Ramadan and the subsequent holidays are expected to affect demand due to slower output rates at downstream factories and shortened work days. However, any increased supply and pressure on prices could lead to some restocking demand, given the sharp increases in prices through Q1.

US

MDI supply is expected to improve during Q2 as polar storm-related outages will mostly be resolved. Ongoing run rate limitations at chlor-alkali plants is likely to keep chlorine supplies tight and this will continue to put caps on effective average operating rates at MDI plants. The market may continue to face tightness as strong demand and limited run rates will keep inventory levels on the lower side.

Demand for MDI and downstream PU systems is expected to remain strong throughout Q2 as US manufacturing activity remains at multi-year highs, encouraging strong demand for consumer durable goods. Ongoing coronavirus-related movement restrictions is likely to keep consumer spending focused on manufactured goods rather than services over the next several months.

TDI
Updated to Q2 2021

Asia

TDI supply is likely to see mixed conditions going into Q2. Scheduled maintenance at a South Korean maker’s facility is expected to tighten cargo availability, but supply should once again increase with the end of the turnarounds, barring unforeseen events. There are limited new facilities planned for Q2.

Demand for TDI is likely to come under pressure as buyers exercise caution following some price declines seen at the end of Q1, especially since prices for related product polyether polyols also fell with upstream PO price drops. However, considering the earlier supply shortage that plagued the region, buyers are expected to replenish dwindled inventories.

Europe

TDI supply is expected to remain constrained for at least half of Q2, as BASF’s Ludwigshafen plant is not expected to resume production until mid-May. TDI supply tightness is likely to be tempered, however, by constraints in demand linked to a shortage of polyether polyols that is expected to continue in the near term.

Demand for flexible foams is expected to weaken seasonally in Q2, although the reopening of shops and retail outlets could also lead to further demand growth once lockdowns are lifted. Constraints on the availability of feedstock polyols are expected to continue to limit some foam production and impact TDI demand.

Middle East

Supply is expected to increase especially from Asia as raw materials prices decrease and as netbacks to other regions also decline. There are limited known plant maintenance shutdowns expected among major suppliers in the quarter that could curb overall supply to the Middle East.

The start of the Muslim fasting month of Ramadan and the subsequent holidays are expected to affect demand due to slower output rates at downstream factories and shortened work days. However, any increased supply and pressure on prices could lead to some restocking demand, given the sharp increases in prices through Q1.

US

TDI supplies in the US are expected to improve in Q2 as polar storm-related outages are likely to be resolved. Average operating rates are likely to remain on the lower side amid ongoing shortages in chlorine supplies due to reduced operating rates at chlor-alkali plants while inventory levels are anticipated to remain low on strong demand and limited TDI run rates.

TDI demand is expected to remain strong through Q2. Demand for automotive and furniture and bedding applications is expected to remain strong as consumer spending on residential construction and remodelling is expected to remain healthy while automotive demand will find support from an ongoing movement of consumers from urban to suburban areas as well as infrastructure spending tied to government stimulus money.

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