Chemical Profile: Europe MDI

17 July 2014 18:14 Source:ICIS Chemical Business


Methyl di-p-phenylene isocyanate (MDI) is used mainly in polyurethane (PU) foams. Rigid foams are mostly used in construction, refrigeration, packaging and insulation. Flexible foams are used in furniture, bedding and transportation.

MDI is also used to make binders, elastomers, adhesives, sealants and coatings.

European methyl di-p-phenylene isocyanate (MDI) demand from the main downstream construction sector was better than anticipated during the first quarter of 2014, contrary to low seasonal expectations, on the back of a mild winter in Europe.

In the second quarter of 2014, construction demand has been relatively steady, although some players said it was not as good as seasonally expected. This is because of generally higher than anticipated activity during the first quarter. Ongoing economic constraints, particularly in the Mediterranean also limited building activity to some extent.

MDI is also used in the automotive sector and there has been some general pick-up in demand in this sector for nine consecutive months to May, according to industry trade data. While MDI demand has benefitted from some improvement in automotive demand over recent months, there was talk of some shift in usage from MDI to toluene di-isocyanate (TDI) for new vehicle production because of lower volatile organic compounds (VOC) foam emissions, performance and cost related benefits. However, the extent of any switch is being limited by existing technology and investment.

European crude MDI contract prices firmed by €30-50/tonne between February and April 2014, taking values to €2,070-2,130/tonne FD W. Europe. Pure MDI prices have risen by €30/tonne during the first quarter and into early Q2, taking prices in April to €2,260-2,330/tonne FD. W. Europe. The upward price move in the first part of 2014 was driven by margin recovery amid high upstream benzene costs and healthy demand. Prices during the second quarter were largely steady, with the exception of some price rises in April. The general stability during the second quarter was attributed to fairly balanced market conditions, despite some fluctuation in upstream benzene costs. In July and for Q3, crude MDI prices largely softened, despite increase cost pressure, because of a balanced to long MDI market. Rollovers were also heard in July, but they were not seen to reflect the general market trend. For pure MDI, rollovers and modest reductions were heard in July because of mixed demand and good supply.

MDI is made by hydrogenating nitrobenzene to aniline, which is then condensed with formaldehyde to form diphenylmethane diamine. The condensation step controls the composition of the polyamine, which is reacted with phosgene in a solvent to yield the isocyanate mix. Pure MDI is then distilled off the MDI stream under reduced pressure.

Germany’s Bayer MaterialScience (BMS) has developed a more efficient process for producing aniline, an important intermediate for MDI. According to BMS, in the conventional process, the reaction between nitrobenzene and hydrogen to form aniline takes place in a reactor block, which is made up of several tubes; with the new technology, one large vessel is sufficient. Instead of using a complex reaction with heat transfer oil, the new process involves the heat being channelled away with the gas stream, removing the need to exchange heat with the environment.

In the long term, MDI demand is expected to grow globally by 6-7% per year, with demand growth estimates for Europe at around 4-5%, according to industry players. Demand growth is likely to be underpinned by the insulation sector. This is attributed to the European Union (EU) Energy efficiency directive which has the target to cut energy consumption in the EU by 20% by 2020. One MDI buyer, noted, however, that it often takes time before energy saving measures filter through into actual MDI and insulation demand.

In terms of supply, the focus is on the Sadara chemical complex in Jubail Industrial City in Saudi Arabia, which will compromise of 26 manufacturing units, which are set to produce more than 3m tonnes/year of value-added chemicals and performance products to include polyurethanes among other chemicals. The construction of the Sadara chemical complex which is a joint venture between Saudi producer Saudi Aramco and Dow Chemical is expected to be complete by mid-2015, with full operations expected to start in 2016.

In Europe, Bayer MaterialScience (BMS) said earlier in 2014 that it has put its plans on hold to convert its existing 160,000 tonne/year TDI facility at Brunsbuettel, in Germany to MDI production, although the company said it continues to monitor the market situation.

The last main MDI capacity expansion in Europe was for BorsodChem in 2011, when the nameplate capacity at its MDI M2 unit at Kazincbarcika was increased from 150,000 tonnes/year to 240,000 tonnes/year. BorsodChem said at the time that its capacity expansion was mainly being used to replace imports from Asia. Since this capacity addition, the European MDI market has been more focussed on tailoring existing production to demand, on the back of an uncertain economic climate. BorsodChem’s MDI M1 plant also in Hungary, which has a nameplate capacity of 60,000 tonnes, has been idled since 2009 for market reasons.

The only MDI related production plans is for Huntsman who intends to commission a new MDI splitter and downstream specialties manufacturing unit at its Dutch site, by the end of the fourth quarter of 2014 which is intended to provide new polyurethane products in main end user sectors such as automotive and coatings among others.

By Heidi Finch