Asia PMDI may bottom out, but MMDI suffers weak demand

Polymeric methyl di-p-phenylene isocyanate (PMDI) prices in Asia may be bottoming out after near 40%-plunge over three months, as supplies tighten.

But downside potential for monomeric MDI (MMDI) prices is still high, as buyers continue to see MMDI as “disproportionately overpriced” vis-à-vis PMDI, a regional trader said. Discussions for PMDI were in the $1,450-1,500/tonne CFR (cost-and-freight) China range this week, market participants said.

This is broadly similar to the week prior, albeit within a narrower range. It is may be the first time in the last three months that PMDI prices did not break new low grounds, week on week.

Sellers were hopeful that this meant prices are bottoming out for PMDI, especially since the spread to feedstock benzene has narrowed significantly, “squeezing margins substantially”, said a regional producer.

Sellers see potential pricing support from tightening supplies, as some MDI plants started to shut for maintenance or ran at lower rates. A 400,000 tonne/year plant in Ningbo by China’s Wanhua Chemical, went off line earlier this week for a 22-day maintenance.

In South Korea, Kumho Mistui Chemicals Inc (KMCI) is operating its 300,000 tonne/year MDI line in Yeosu at a lower rate of around 75%, as supplies of feedstock carbon monoxide slow on the back of upstream maintenance. But demand remains “structurally weak”, a regional trader said, with buyers, especially in China, still shying away from bulk purchases.

A key PMDI application is in the manufacture of insulation panels used in electrical goods like refrigerators, and market players said that refrigerator sales have been limp in China, affecting the off-take rate of PMDI. Activities in the construction sector, another major PMDI application, are also slowing, with the onset of colder winter months in China.

As long as there is no discernible uplift in demand, the prospects of a near-term recovery in PMDI prices are slim, even if prices do not fall further, market participants said.

Unlike PMDI, monomeric (pure) MDI prices are still falling, as discussions on November MMDI shipments into China slipped way below $2,500/tonne CFR China this week, market participants said. On 31 October, MMDI settled at an average of $2,625/tonne CFR China, according to ICIS data.