GCC TDI may fall further on higher supply as BASF plant restarts

27 July 2018 04:32 Source:ICIS News

SINGAPORE (ICIS)--Spot import prices of toluene di-isocyanate (TDI) in the Gulf Cooperation Council (GCC) are expected to be weighed down in the coming weeks by increased supply after German chemical major BASF resumed production at its Ludwigshafen plant.

In the week ended 26 July, TDI prices declined to $3,400-3,500/tonne CFR (cost & freight) GCC, marking the lowest since 3 August 2017, according to ICIS data.

TDI prices in the GCC have been steadily falling since June 2018 but the longer-term downtrend has been in place since March, according to ICIS data.

ICIS Editorial Chart goes here

The resumption of TDI production from BASF’s 300,000 tonne/year Ludwigshafen plant is considered an important milestone for the TDI supply chain in Europe but could also have an impact on the Middle East market.

BASF shut down the plant in the second half of January for maintenance and to prepare for installation of a new reactor, a company source said.

The shutdown contributed to a shortage of TDI supply in Europe in the second quarter and also played a part in driving up TDI prices in the GCC back to their record highs of $4,650/tonne CFR GCC in March.

"After the installation of the new reactor and maintenance, the TDI plant has been started and is producing TDI," the company source noted this week.

In the spot market this week, there was not yet a clear reaction in price moves to the BASF restart but TDI prices continued to lose ground.

“Already supply is much more than demand,” said a Middle East source.

“If BASF starts supplying to their customers in Middle East and Africa prices will surely move down further,” the source said.

TDI offers of Korean and other NE Asian-origin material this week were limited.

Demand was also not encouraging although discussions were ongoing. Many foam-makers in the region were still hoping for further prices declines in TDI and were holding back on purchases.

Supply was considered to be sufficient but is widely expected to increase after the BASF restart and with South Korea’s Hanwha Chemical also expected to resume full production at its TDI plant by early August.

Hanwha shut down its three 50,000 tonne/year lines in turns, starting 16 July for tank cleaning, which was estimated to last four to five days each, according to sources. The plant’s average operating rate will be at around 70% of capacity during this period.

Focus article by Izham Ahmad

Picture: Toluene di-isocyanate (TDI) is mainly used for the production of polyurethane (PU) flexible foams used in upholstery, mattresses and automotive seats. (Source: Design Pics Inc/REX/Shutterstock)

By Izham Ahmad