Asian TDI Overview
April 17, 2023
China TDI Market Rebounds Under Continuous Supply Contraction
PUdaily | Updated: April 14, 2023
China’s TDI market has rebounded rapidly since last Thursday. As of April 13, TDI prices in East China stood around CNY 18,400-19,000/tonne, an increase of over CNY 1,000/tonne compared to last week.
Figure 1: China TDI Price Trend in 2023 (CNY/tonne)
Although China’s TDI market remained strong at the beginning of 2023, with the arrival of the Spring Festival, downstream manufacturers gradually went on holiday, and the trading atmosphere was generally sluggish. After Spring Festival holidays, the TDI market opened with a jump in prices, as not only did Gansu Yinguang Chemical not restart TDI facility, but existing capacity also continued to decline: a 100 ktpa facility in Fujian was shut down permanently from February 1; Covestro and Juli Chemical had significantly reduced operation loads due to equipment issues; and other suppliers did not increase output into the market either. As a result, the TDI spot supply remained relatively tight, with traders raising their quotes, and market prices quickly climbing to quarterly highs. However, due to weaker-than-expected demand, the high market prices were difficult to sustain, and under sales pressure, the market began a lingering downtrend. Despite continuous support from suppliers’ pricing policies, and overall low operating rates, weak purchasing power continued to drag down the market, leading to repeated price declines.
After entering April, the 150 ktpa TDI facility of Juli Chemical has undergone maintenance, while Yinguang Chemical still has not resumed normal production. Previously, due to market expectations that prices would continue to decline after the release of new capacities from Yinguang Chemical and Wanhua Chemical’s Fujian plant, many market participants kept a cautious and wait-and-see attitude. However, it’s reported that there is still no consensus on whether Yinguang Chemical will release its products into the market in April, and the spot market is becoming increasingly tight. Moreover, since the shutdown of TDI facilities by BASF in Europe, Asian TDI suppliers led by BASF in South Korea have provided extensive support for exports. Starting from April 15, Hanwha’s TDI unit in South Korea will also enter maintenance, which will further tighten the supply of Korean TDI exports. This gives more opportunities for Chinese TDI suppliers to increase their overseas market supplies, reduces domestic sales pressure, and provides indirect support for the recent rapid rebound of TDI prices.