Wanhua: resume production of MDI and TDI devices in Yantai Industrial Park

Wanhua Chemical announced on August 22 that the company's Yantai Industrial Park MDI device (600,000 tons/year) and TDI device (300,000 tons/year) have resumed normal production. With the advent of the peak season for traditional demand in the second half of the year and the gradual increase of MDI prices, the company's performance in the second half of the year will likely improve.

Currently, the main global MDI suppliers are only Wanhua Chemical, Covestro, BASF, Huntsman, and Dow Chemical. Among them, Wanhua Chemical has a production capacity of 2.1 million tons per year, ranking first in the world. Affected by the epidemic and declining gross profit margins, only Wanhua Chemical, Covestro, and BASF had clear expansion plans in the first half of the year. In the first half of the year, Wanhua Chemical's Fujian project started construction and plans to build a new 400,000 tons of MDI production capacity.

The MDI market has been in a downturn in the first half of the year. The semi-annual report shows that in the first half of the year, Wanhua Chemical's average listing price of pure MDI decreased by 29.56% year-on-year; the average listing price of polymerized MDI (direct selling) decreased by 10.68% year-on-year; the average listing price of polymerized MDI (distribution) decreased by 11.61% year-on-year.

Affected by both supply and demand, MDI prices have entered a rising channel since the third quarter. Since July, global MDI overhauls and force majeure have occurred frequently, with the affected production capacity reaching 1.1 million tons/year, and global supply has tightened. In terms of demand, beginning in the second quarter, the output of refrigerators, freezers, and automobiles in the downstream of the industrial chain increased to varying degrees.

In August, Wanhua Chemical increased the listing price of MDI significantly, and the prices of direct selling, distribution and pure MDI of polymer MDI were increased to 15,500 CNY/ton, 15,500 CNY/ton and 17,000 CNY/ton, respectively, up 9.4% from the average listing price in the second quarter of this year. , 13.4% and 4.1%. Guosheng Securities believes that with the gradual rebound in core product prices, Wanhua Chemical's performance in the second half of the year is expected to improve quarter by quarter.

Wanhua Chemical is not the only one who adjusted the price. A few days ago, BASF, another chemical giant that produces MDI, announced that starting from September 1, 2020 or the time permitted by the contract, BASF will increase the price of its Lupranate MDI (methylene diphenyl diisocyanate) product by an increase of US$0.12/lb, which is approximately RMB 1830/ton. It is understood that BASF’s listing price of polymer MDI to distributors in August was 15,500 CNY/ton, which was an increase of 1,000 CNY/ton from the previous month.