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BASF TDI restart signals shift towards overcapacity, lower operating rates, prices
Jul 28, 2018

Toluene di-isocyanate (TDI) prices globally are likely to fall further as the market moves from a sustained period of tightness into overcapacity and lower operating rates as it rebalances following the re-start of BASF’s TDI facility at Ludwigshafen, Germany.

The 300,000 tonne/year facility had been due to start up in 2016 but a series of technical problems delayed full restart until now.

The global TDI market had been relying on this start-up, plus the 200,000 tonnes/year Sadara facility in Saudi Arabia, to balance supply and demand following the closure of other facilities back in 2014-16.

However, the BASF and Sadara start-ups were delayed and a series of other shutdowns and force majeures added to the tightness causing prices to soar, and the spread from feedstock toluene widen.

From June, prices have started to fall in anticipation of the BASF restart.

The BASF plant accounts for around 10% of the roughly 3m tonnes/year global TDI capacity.

“The spike in prices has been caused by numerous shutdowns and force majeures, especially impacting the Middle East. TDI was also hampered by the fact that plants shut down from 2014-16 and were not replaced because the BASF and Sadara units did not start up,” 

“If BASF ramps up to 80% or more, and sell the product then over the next two-three months, there will be downward pressure on prices in Europe and the Middle East.

The TDI market is extremely consolidated, with the top five producers controlling more than 70% of the market.

BASF and peer German producer Covestro are the world’s two largest producers.

Speaking on Friday, BASF's CEO Martin Brudemuller said: "TDI has seen a special situation seen over that last year and a half, which is now coming back to normal. We have high supplies in the world and of course we have to adjust our volumes."

Covestro, with 30% global market share, enjoyed “fly up” margins of €500m in 2017 thanks to the unusually tight TDI market.

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