GCC TDI price outlook unclear despite first increase in over a year

Source: ICIS News

2019/03/15

SINGAPORE (ICIS)--Spot import prices of toluene di-isocyanate (TDI) in the Gulf Cooperation Council (GCC) increased for the first time in over a year but whether this marks a reversal in trend is unclear as buying sentiment remains cautious.

(Source: TI Media Limited/REX/Shutterstock)

In the week ended 14 March, TDI import prices in the GCC were at $1,675-1,730/tonne CFR (cost & freight) GCC, up between $25-30/tonne from the previous week and gaining for the first time since early March 2018, according to ICIS data.

TDI prices in the GCC have been on a downtrend since hitting record highs of $4,650/tonne CFR GCC in mid-March 2018.

But it remains unclear whether this week’s price increase would indeed mark the start of a long-awaited recovery in buying sentiment but TDI prices in Asia also appear to have bottomed out over the last week.

What is more likely would be a period of some price stability before prices start to creep higher, market sources said.

“In the Middle East and Africa demand is still generally weak. So I am not sure if buyers will accept these prices and if they do, it will not be accepted by everyone,” said a source in the GCC.

Producers were optimistic that GCC buying interest could improve in the coming weeks and that a general recovery in the TDI market would then take hold. The primary outlet of TDI is in the manufacture of polyurethane (PU) flexible foams used in upholstery, mattresses and automotive seats.

“I think buyers know this is bottom price from last week, and they don’t have much stocks, and seasonal peak season is coming,” said one Asia supplier.

The TDI GCC import price range for this week reflected deals done at both ends of the range while offers for the week were also mostly within the range or slightly higher.

But offers above the assessment range were being met with subdued response from buyers, suggesting there was still some wariness among buyers to commit to the full price increase yet.

One producer said it had sold some small volume of TDI to buyers in the GCC at the high end of the range at $1,730/tonne CFR GCC but only for customers to sample before they commit to larger volumes.

There were also cargoes of Asian-origin TDI sold to GCC buyers within the range, at $1,700/tonne CFR GCC.

“I think suppliers will try to keep prices (stable) or even increase them a little bit more even though they are not being accepted that much,” said the GCC source.

Although TDI supply was currently deemed sufficient, some suppliers were flagging the possibility of shorter supply over the coming weeks, as some Asian producers were expected to start building inventories in preparation for regular maintenance shutdowns around the middle of the year.

ICIS Editorial Chart goes here

Focus article by Izham Ahmad