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US isocyanates face longer supply
Major change to market dynamics as supply for TDI and MDI improves after tight conditions. BASF restart anticipated
Zachary Moore houston
The US isocyanate markets are en-
tering the second half of 2018
with prices facing downward
pressure on lengthening supply.
This represents a major change
in market dynamics, as isocyanate
prices were driven higher
throughout 2017 amid an extend-
ed period of tight supply.
Supply for polymeric methyl
di-p phenylene isocyanate (PMDI)
has lengthened over the past sev-
eral months. US plants are operat-
ing at higher rates. Asian produc-
ers have raised allocations to
North America, as export sales
offer more attractive netbacks than
regional sales.
Monomeric MDI (MMDI) sup-
ply is tight and is expected to re-
main limited over the coming
months. According to data from
the American Chemistry Council
(ACC), around 85% of all US MDI
sales are for PMDI, while MMDI
sales make up the remaining 15%.
eUROPE
Europe July ABS to track
styrene and BD lower
Morgan COndon london
July contract negotiations for Eu-
ropean acrylonitrile butadiene
styrene (ABS) are underway.
Key upstream material styrene
continues to be main driver of
ABS, and following the €50/tonne
drop in June prices, market partici-
pants are expecting ABS contracts
to move in a similar fashion. This
is in line with one of the secondary
components of the compound,
butadiene (BD) which settled at a
€25/tonne decrease in July.
Supplementary feedstock acry-
lonitrile (ACN) prices for June
were confirmed last week at an
increase of €93-100/tonne, while
20 | ICIS Chemical Business | 13-19 July 2018
US TDI/MDI DROP AFTER MULTI-YEAR HIGHS
Cents/lb, spot FOB US Gulf export drummed
200
MDI - polymeric/crude
180
160
140
120
100
80
60
Jul
2015
Toluene di-isocyanate (TDI) sup-
ply also has lengthened, with most
buyers easily sourcing material.
TDI supply was exceptionally
tight throughout most of 2017, re-
sulting in high margins for TDI
producers and significant margin
compression for converters. US
plants are operating at healthy
rates. Asian producers are raising
export allocations as TDI availa-
bility there have eased.
initial July contracts have also
been announced at a €10/tonne
rise. Negotiations are likely to
continue and are expected to
reach settlements over the next
couple of weeks, but initial feed-
back indicates that prices could
fall in July. In June prices moved
up by €80/tonne, which was a
bigger increase than anticipated.
This led some sources to spec-
ulate that though the supply-de-
mand balance remained stable,
buyers who sometimes acquire
spot volumes may have been de-
terred from transactions in June
due to the substantial increase.
As supply of ABS in Europe re-
mains steady any price increase
For up-to-date information on more
icis.com/about/price-reports
TDI - 80:20
Jul
2018
In addition, the expected restart
of BASF’s 300,000 tonnes/year
TDI plant in Ludwigshafen, Ger-
many will further loosen TDI sup-
ply in the second half of the year.
Although BASF missed its target-
ed Q2 restart, the plant is expected
to be online by the end of July.
Downstream demand from the
furniture and bedding sector has
been sluggish recently. Automo-
tive demand has slowed from the
EUROPE ABS
€/tonne, domestic FD NWE
3,200
Compounding grade natural
Injection moulding colour
3,100
3,000
2,900
2,800
2,700
2,600
2,500
2,400
Jul
2017
could encourage an uptick in de-
mand as buyers capitalise on the
reduction of feedstock levels.
This is not guaranteed, as if
downstream sites close or slow
production in line with any sum-
mer slowdowns, then buyers will
be less inclined to buy bigger vol-
umes if it means paying to store
them without use. Any imported
prior year. Demand from con-
struction has picked up, in line
with the traditional high season.
Isocyanates are combined with
polyols to manufacture polyure-
thane foams, which are used in a
wide variety of applications in the
construction, automotive, furniture
and appliance industries. TDI is
most commonly used in the manu-
facture of flexible foams, while MDI
is more commonly used in the
manufacture of rigid foams.
With TDI and MDI supply eas-
ing and buyers easily receiving al-
locations, prices are likely to face
downward pressure, as buyers
seek relief after significant margin
compression over the past year.
Global prices for both TDI and
MDI have already fallen signifi-
cantly, with North American buy-
ers anticipating some relief in their
upcoming contract negotiations. ■
Global TDI markets switch
to oversupply in H2: click
here to listen to podcast.
Injection moulding black
Jul
2018
material available on the Europe-
an market is unlikely to competi-
tive with domestic volumes due
to the current exchange rate.
The weakness of the euro
against the US dollar has already
eroded margins for Asian produc-
ers, and any price reduction would
reduce netback further without
guaranteeing a rise in sales. ■
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