Natural Gas as Related to MDI
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| Johan, CC BY-SA 3.0 Natural gas prices are being passed to MDI American chemicals producer, Huntsman, has announced that it will be increasing the price of its methylene diphenyl diisocyanate (MDI) due to high natural gas prices.|
Breaking it down:
Remember last time when we talked about Yara’s response to rising natural gas prices? Yara decided to cut back its ammonia production by 40% instead of passing the additional production cost down the value chain. Huntsman made the call to add a surcharge of €125 (which is roughly a 10% price increase) to its MDI production.
The decision to cut production or increase prices has to do with current storage levels and whether the end market is willing to pay the price. Ammonia is used to make fertilizers and MDI is used to make polyurethanes. Apparently, polyurethane consumers can eat the margin.
Wait, natural gas prices are high?
Take a look at the price at the top of the newsletter (HH stands for Henry Hub—a nickname owed to pipeline nexus in Louisiana). It’s twice as high as normal here in the US, but even higher in regions that rely on oil & gas imports (cough cough Europe). Give Wednesday’s newsletter a read if you’re interested in what’s causing the spike.
Read the press release here.