Chinese TDI Overview
Will TDI Price Rebound as the Peak Season is Coming?
PUdaily, Shanghai– In July, the downward trend of TDI price in the typical off season was reversed. The bullish sentiments among dealers became stronger as the manufacturers increased their fixed offers continuously. Due to the dealers’ reluctance to sell goods, the price gradually rose. Although there was a short period during which correction occurred as a result of the previous rapid rise in price, the overall TDI price showed an upward trend throughout July.
After the exhibition PUChina ended in early August, the price again rebounded sharply. Later, TDI price entered the correction period. At this point, sellers’ mentalities were divided. Some of them proactively reduced price to facilitate sale. Whereas some were cautious, showing less willingness to sell. Currently, price of TDI from foreign-owned manufacturers in east China stands at around RMB 31,000/ton. And price of TDI from Chinese producers stays at RMB 30,000-30,500/ton. Market players’ opinions are widely divided on how the price will move in the future. Next, PUdaily will perform the analysis from several aspects for your reference.
Supply side: the following table shows the maintenance plans at home and abroad as well as new capacities that will come onstream in the fourth quarter.
Table 1 status of TDI facilities in H2 (in 10k t/a)
|Company name||Designed capacity||Status of facilities|
|Covestro Shanghai||25||Scheduled to undergo maintenance|
|Gasu Yinguang||10||Scheduled to undergo maintenance for 1 month starting from August 22|
|Juli Chemistry||8||Scheduled to undergo maintenance in September|
|Covestro Germany||30||Scheduled to undergo maintenance in September|
|OCI Company||5||Scheduled to undergo maintenance in November|
|BASF South Korea||16||Scheduled to undergo maintenance in October|
|Hanwha Chemical||15||Scheduled to undergo maintenance in October|
|Wanhua Chemical||30||New facilities will come onstream in Q4|
|Sadara||20||Scheduled to be restarted in late August|
|BASF Germany||30||Operation is unstable in August|
As can be seen from the table, many domestic TDI producers will perform maintenance in and around September. Thus, their supplies are expected to decrease in the future. Besides, some TDI producers in South Korea will shut down their facilities for maintenance in October and November. Therefore, it is projected that the volume of imports from this country will be limited in September and October. It is also worth mentioning that Sadara’s TDI facility is scheduled to be restarted in late August. But it is expected that this will have little impact on domestic market as only a small volume of its exports goes to China each month. Therefore, TDI supply is expected to tighten in the coming months, and manufacturers will have strong motivation to pull up the price. There is high likelihood that they will increase their fixed offers.
Demand side: Currently the recovery in demand is not robust. Downstream inventories are still high now as buyers made some purchase from the beginning of July to that of August, resulting in their low motivation to make purchase. This is also the main reason for the recent correction. With the depletion of the inventories, it is expected that rigid demand-based purchase can still be witnessed in the mid-to-late August. Meanwhile, as the traditional peak season (from September to October) is coming, the possibility cannot be ruled out that some downstream manufacturers will increase purchase.
Mentality of market participants: As some imported goods will arrive at the port around August 20, most of the market participants are bearish on the market in mid-to-late August. But they also think the incoming drop in price can be seen as preparedness for the rebound beyond August. In addition, good news has come in that some domestic manufacturers will overhaul their facilities in September. Therefore, market participants are bullish on market around mid-September.
To sum up, correction will be the main feature of TDI market in mid-to-late August. In September and October, the market is expected to bounce back on the back of the slow recovery in demand and maintenance by some manufacturers.
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