The Urethane Blog

European TDI Overview

Market outlook: Europe TDI to be well supplied in 2016

21 December 2015 00:00 Source:ICIS Chemical Business

 BASF’s Ludwigshafen site

BASF’s new 300,000 tonne/year TDI plant at Ludwigshafen started up in November 2015

The European toluene di-isocyanate (TDI) market will likely be well supplied in 2016 given the latest new capacity to have come online.

BASF started its new 300,000 tonne/year TDI plant in Ludwigshafen, Germany in late November 2015, approximately a year since Covestro (formerly named Bayer MaterialScience) inaugurated a 300,000 tonne/year facility in Dormagen, Germany.

In light of relatively flat demand for TDI, the addition of such significant capacity raises questions.

However, the extent of the impact of the latest addition to the European market remains to be seen as BASF’s new plant ramps up.

“Ludwigshafen will not have much impact [on the TDI market],” another TDI producer said.

“Investment for TDI raises questions regarding overcapacity without growth [of demand]. Three things will happen [following the start-up of the new plant]. [The stopping] of imports of TDI, then they [BASF] will start full [TDI] production. People will get very nervous [about overcapacity].

“Some players [have already] dropped out of the market. [Feedstock] toluene [prices] dropped but margins [for TDI producers] are still poor. The market [demand] is simply not there. Dropping prices will not help long term. People (producers) need to have a minimum production. I [therefore] do not expect much effect of [the new] capacity on prices,” the producer said.

“In 2016 I don’t see the market as long because of the new capacity,” a TDI buyer said.

“BASF will reduce imports [of TDI to Europe] and produce their own material instead. There has been no official communication [from BASF regarding this], but this is what people know,” it added.

A trader said: “Let’s wait and see regarding Ludwigshafen. It’s not running at full speed [yet]. They might stop imports [to Europe].”

BASF also operates a TDI plant in Schwarzheide, Germany, which will be taken out of operation as production at the Ludwigshafen unit ramps up.



In terms of the future market structure of methyl di-p-phenylene isocyanate (MDI), Covestro announced on 4 December that it will close its 170,000 tonne/year plant in Tarragona, Spain, by the end of 2017 on the back of “non-competitive production cost”, with up to 120 jobs at risk.

After approving the MDI plant closure, Covestro’s supervisory board said production of polyurethane and hydrochloric acid at the firm’s other facilities in Tarragona would remain unchanged. It is unclear whether this announcement will have any impact on the MDI market in 2016.


Much uncertainty regarding the outlook for both the MDI and TDI markets also stems from global events, including the threat of terrorism and the migrant crisis in Europe.

“It’s difficult to say [what the impact might be next year],” the trader said.

“Terrorism can affect our business. Normally if a 300,000 tonne/year [TDI facility] started it would have an effect, but there are lots of question marks… The [terrorist] attack in Tunisia will affect business. Tourists will not come to Tunisia. Hotels will need less mattresses. Let’s wait for half a year and see what the BASF plant will affect,” it added.

From a global TDI perspective, the aforementioned producer said the migrant crisis has actually resulted in increased demand for mattresses.

“There were 180,000 refugees [entering Germany] in early November. 20% more mattresses were sold because of the refugees,” the producer said.

However, the source believes the greatest threat to the isocyanates markets will likely come from a lack of investment in Europe from other regions, which could impact downstream industries such as automobiles, construction and the bedding and furniture sectors.

“An increased risk of terrorist attacks in Europe would impact investment planning, and that would impact the use of cars, mattresses, and other industries,” the producer said.

“The US [could] hold back from investment in Europe. What could also have an impact is the tension between Russia and Turkey.”

By Jo Pitches