AFPM ’19: US MDI, TDI markets to see ample supply, weaker pricing in 2019

HOUSTON (ICIS)–US markets for both methylene diphenyl diisocyanate (MDI) and toluene di-isocyanate (TDI) are anticipating longer supply and weaker pricing for 2019 heading into this year’s International Petrochemical Conference (IPC).

In 2017, supply for both products was persistently tight, leading to significant price increases for both products.

TDI supply shifted from tight to long in the second half of 2018 following the restart of BASF’s TDI plant in Ludwigshafen, Germany after a lengthy outage as well as the start-up of Wanhua’s new plant in China.

Both plants are world-scale facilities with capacities of 300,000 tonne/year or around 10% of global TDI demand.

The addition of these new plants has turned a persistently tight market into a persistently long one, with consequent declines in pricing.

Oversupply is expected to remain in place while demand growth has been slower than anticipated, suggesting that the pricing outlook will remain largely bearish throughout the rest of the year.

MDI markets also moved towards a state of oversupply in the second half of 2018 after remaining tight for much of 2017.

Polymeric MDI (PMDI) supplies lengthened as Asian producers increased their allocations to the North American market in response to weaker demand in their local markets and healthy arbitrage opportunities between Asia and North America.

The market will be closely watching the progress of trade talks between the US and China to gauge the likely interest of Asian producers in the US market moving forward. China is by far the largest exporter of MDI to the US and is facing additional tariffs on MDI exports to the US stemming from trade tensions between China and the US.

Monomeric MDI (MMDI) supply was the exception in 2018, with strong demand growth keeping supplies tight and causing pricing to move higher as a result.

The different pricing dynamics for PMDI and MMDI resulted in a widening spread between MMDI and PMDI prices over the past year.

MMDI supply has recently shown indications of becoming more balanced with demand, although the impending high season for the construction industry may cause availability to tighten again in the coming months.

Isocyanates are reacted with a polyol to produce polyurethane foams. MDI is generally preferred for rigid foam applications while TDI is generally preferred for flexible foam applications.

Major US isocyanate producers include BASF, Covestro, Dow Chemical and Huntsman.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Zachary Moore