GCC PMDI likely to stay under pressure, following soft China prices

SINGAPORE (ICIS)–Spot import prices of polymeric methyl di-p-phenylene isocyanate (PMDI) in the Gulf Cooperation Council (GCC) are likely to extend declines as they follow a soft trend in China’s import values.

Last week, deals and discussions for PMDI imports into the GCC were within a $2,000-2,100/tonne CFR (cost & freight) GCC range, down by $100/tonne from the previous week.

These also marked the lowest prices for PMDI in the GCC since January 2017.

Market sources said the downtrend came after import prices in China dropped by more than $200/tonne to fresh two-year lows in the week ended 29 August.

In that week, PMDI prices in the GCC held stable but the Chinese declines eventually dragged GCC prices down as well.

According to ICIS data, GCC PMDI prices have been on a downtrend since November 2017 after they peaked at $3,450/tonne CFR GCC.

This week, a key Asian PMDI producer said it had finalised deals at the high end of the range for cargoes to be delivered in September while a GCC buyer said it managed to secure some cargoes at $2,000/tonne CFR GCC, a level which some suppliers felt was too low in current market conditions.

However, they still considered the lower deal price to be workable after the recent decline in PMDI import prices in China.

“China price is already below $2,000/tonne (CFR China) so I think $2,000/tonne for GCC is very possible,” said one market source.

A break below $2,000/tonne CFR GCC is likely to have some psychological impact on sentiment as well, given that PMDI prices in the GCC have not traded below that level since the first week of 2017.

Other PMDI suppliers confirmed that demand was still generally soft among their customers in the Middle East, and as such they were still struggling to close deals at current prices.

That also suggested further price declines could be forthcoming in the weeks ahead.

“We offered $2,100/tonne CFR GCC but received no reply from our customers,” said another market source. “We think this is not so workable anymore.”

Still, continued losses in PMDI prices are not assured as the isocyanates market typically experiences a strong seasonal demand peak in the final quarter of the year.

Supply-wise, there are no major shutdowns expected over the next few months aside from Japan’s Tosoh Corp, which plans to shut its 200,000 tonne/year plant in Nanyo for a 45-day scheduled maintenance beginning in the middle of September.

Focus article by Izham Ahmad