The Divergence Expanded in the Chinese TDI Market

Introduction: On April 24, 2018, the TDI market was quiet and no trading news was heard. Moreover, the supply of low-priced goods declined. No lower prices were heard.

On the one hand, mainstream traders’ inventory had been consumed to a low level. And the production cost couldn’t support the low prices. Most producers sold goods in a loss. Thus, TDI producers were unwilling to continue to cut down prices.  

On the other hand, behind the low prices, the supply of TDI was tight. Most downstream users cannot buy the low-priced goods. Previously, buyers offered low prices and holders with high inventories cut down prices on the sales pressure. The overall market was dragged.  

In the past two weeks, the TDI prices moved down rapidly. Mainstream Chinese producers sold out their goods. On the other hand, the sales of TDI produced by BASF was active. Before the publishing of BASF’s settlement prices, most agents showed a wait-and-see position without inventory.     

Furthermore, some trading news was heard in the futures market. Downstream users were quiet on the buy-high mentality. Though Gansu Yinguang stopped selling and the unit at Fujian Southeast Electrochemical was expected to undergo maintenance in June, downstream users’ buying interest was low. The trading activities were sparse.   

Inventories of most users can be consumed for 7-15 days. Some users’ inventories can be consumed to the end of April. Downstream users will continue to purchase TDI from hand to mouth.

The divergence in the TDI market was obvious. Most buyers were confused about the declines in the market. The demand for TDI enters the off-season and the TDI market will continue to be weak in the short term.