European Toluene/TDI Update

More TDI demand in 2017 but production levels uncertain

In terms of chemical demand for toluene, the key outlet remains the toluene di-isocyanate (TDI) market.

Europe production levels in 2017 will hinge on the re-opening of BASF’s facility in Ludwigshafen, which was initially scheduled to be back on-stream at the end of 2015.

Most players expect this to completely fill the supply deficit that has been applying upwards pressure on the TDI market for most of 2016.

Sources have even said that, at full capacity, it could result in an oversupply.

An increase in TDI production next year could see more pull on European toluene volumes, but all of this remains speculative until the Ludwigshafen plant actually comes online and runs consistently.

Even when it began production in the latter half of this year, it was soon closed again. Sources often cite the difficulty of TDI production due to its volatility.

So, while the expectation is for a major increase in TDI production levels in 2017, the reality may not be so straight forward. The repeated issues at TDI plants worldwide can attest to this.

The US TDI market has seen prices rise by 22 cents/lb from the start of January 2016, and by 29 cents/lb compared to the year to date low point during the second quarter of the year.

This largely stems from the global production issues seen on TDI. Buyers are hopeful that TDI prices will stabilise in the first quarter as global supply output begins to normalise, with some buyers on quarterly contracts hoping that they will be able to avoid much of the recent increase movements.

Additional reporting by Cuckoo James, Ben Lake and Zachary Moore