China TDI Price Rises to a Five-Year High in 2017
As this year is coming to an end, the changeful TDI market will also enter a new period. Today, we will review this year's price movement and the causes behind that as well as give a prediction about the landscape of next year.
Annual average price reaches a five-year high
Overall, this year the price of TDI remains high, with the lowest price in early July and the highest in mid-October. This year, it is the highest in five years, which also entails the best profits in five years. Next, we will look at the TDI market in the first and second half of this year respectivly.
The price wound down in the first half of the year
After the Spring Festival, with the advent of the short peak season of March and April. But into May and June, as downstream demand declined, the price began to be on a downward trajectory. During this period, foreigh manufacturers in Shanghai and indigenous manufacturers restricted their supply to slow down the price decline through facilities maintenance. As for foreign manufacturers, both Covestro Shanghai and BASF Shanghai began their annual overhaul in early May, which lasted for 3-4 weeks. In terms of indigenous manufacturers also carried out temporary repair due to facilities malfunction.
All this led to gradual decrease in market supply. Within the two months, the upstream manufacturers were bearish on the market, and the downstream manufacturers postponed their purchase as possible as they can, only making rigid demand-based purchase to replenish their stocks. However, as the price dropped quickly, the manufacturers were bearish on the market and use the deferred price settlement strategy to boose sales. Gradully the low-price spot goods were gradually consumed, and the market quickly fallied. From early July to mid-August, the market price reached a new high in the off season.
The price remained high in the second half of the year
After the price reached its new high in the July-August period, the peak season of September and October came, which coincided with the "environmental check" by the Chinese government that spread the country. As the production of downstream small and medium-sized manufacturers was greatly affected, coupled with the suppression of demand by high prices, the overall demand in this high season was not high, with the price staying at moderately high level. However, after the Naitonal Day holiday, TDI facilities of some overseas manufacturers broken dowm. All these domestic and overseas factors pushed the price to reach the highest for this year.Follwoing that, the market began to see a downturn.
Market forecast for the coming year
Globally, next year market participants' focus will be on the TDI facilities of Wanhua Chemical and BASF Germany, which can produce annual total output of 600,000 tons, elevating global TDI capacity to around 3-4 million tons.
As for domestic manufacturers, Wanhua Chemical will disrupt China TDI market next year. It will help increase China's TDI production capacity by nearly 30% and thus disrupt the overall balance between domestic demand and supply. Because Wanhua is expected to put its new facilities into operation in the third quarter, TDI price will remain relatively high in the first half of 2018. As the new facilities begin to go into production, competition among the manufacturers will become fiercer, which will result in the new market lanscape.
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