GCC TDI prices not seen bottoming out yet amid bearish market

SINGAPORE (ICIS)–Spot import prices of toluene di-isocyanate (TDI) in the Gulf Cooperation Council (GCC) could trend further south following a precipitous drop to near three-year lows, as the persistently bearish market sentiment weighs on market prices.

(Source: TI Media Limited/REX/Shutterstock)

TDI prices fell during the week ended 24 January to $1,700-1,800/tonne CFR (cost & freight) GCC, their lowest since late March 2016, ICIS data showed.

The persistent decline in TDI prices, which has lasted almost a year, has showed no signs of abating with offer prices in the week again being reduced as producers tried to stimulate buying interest.

Offers from some of the main TDI producers in Asia were clustered around the high, at around $1,800/tonne CFR GCC and down about $50/tonne from the previous week although some sellers indicated they were willing to consider further small reductions to close a deal.

But cargo take-up remained at minimal levels with the sellers mainly securing deals only from their regular buyers in very limited quantities, market sources said.

Price competition was also considered to be stiff with most producers having ample supply of material to offer buyers across the Middle East, Asia and Africa.

That has led to severe undercutting of prices, the sources said.

Meanwhile, Middle East buyers indicated they were still holding out for further price declines while demand in the downstream flexible foam market also remained soft.

There was also some talk in the market that one Asian producer had suspended TDI output at its plant until after the Chinese New Year holidays to reduce its operating costs and dampen the impact of the low price environment.

Demand for TDI in the China market is also expected to slow ahead of the Chinese New Year holidays in early February.

The main outlet for TDI is in the manufacture of polyurethane (PU) flexible foams used in upholstery, mattresses and automotive seats.

Focus article by Izham Ahmad