TDI price trend
Shanghai-Cangzhou Dahua, the stock of which has increased by 67% since July, announced on July16 that the price of its main product TDI varied significantly which not excludes market hype factor to some extent. The company also forecasts that total domestic capacity will be more than 1,200kt if the two TDI facilities of Wanhua Chemical and Shandong Juli come into production by 2018. The capacity will exceed market demand.
According to Cangzhou Dahua’s announcement, domestic TDI market has been impacted by both supply and demand with rising price since August. At present, TDI is offered at RMB 39,000/ton (tax) in the market. TDI ex-works price of Cangzhou Dahua is RMB 38,000/ton (tax).
According to analysis of Dahua, TDI market price started to rise because other domestic manufacturers’ facilities were going through overhauls in July and quantities of downstream buyers were increasing. Up to the end of July, TDI market price is at around RMB 31,500/ton (tax). Market demand would increase due to the traditional demand peak season in August.
In terms of overseas markets, the supply of TDI in the European market remains tight, while the workload and supply of the main South Korea TDI manufacturers decreases due to the accident. Under this background, China main TDI manufacturers expand their export volume and decrease domestic sales volume. Therefore, influenced by both global and domestic markets, China TDI market price continues to increase significantly.
Cangzhou Dahua believes that due to the change of supply and demand in TDI market and industry competition, the price of products fluctuates greatly.
With complement of other manufacturers’ overhauls and coming into production, there are big uncertainties whether TDI price and downstream market demand can keep the current level or not. What’s more, the current TDI price is at a relatively high level, which maybe also influenced by some certain market type factor
Additionally, the future new capacity may also bring some risks of price falling. Cangzhou Dahua expects that Wanhua facility with capacity 300kt/year will put into production in 2018. And Shandong Juli plans to build a series of TDI facility with capacity 150kt/year. If the two facilities come into production, the domestic total capacity will be more than 1,200kt. By that time, the capacity is expected to exceed market demand.
In terms of raw materials, it is known that from end-July to early-August, the TDI upstream material toluene supply is tight affected by shutdown and overhauls of manufactures’ facilities together with climate factor in South China, thus causing two rounds of toluene price rising. Due to major raw materials price rising and cost factor, there are also some uncertainties whether or not TDI profit rate will remain or not.
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