The shortage of isocyanate raw materials, the supply of US MDI market is tighten

Due to the shortage of raw materials used in isocyanate production, the supply of methylene diphenyl diisocyanate (MDI) in the United States is facing further tightening.

Dow and Covestro recently announced force majeure in their U.S. MDI plants, while Huntsman’s MDI plant in Geismar, Louisiana is experiencing partial shutdowns. All three manufacturers pointed out that the shortage of raw materials was the main reason for the decline in operating rates. .

The impact of hurricanes Laura and Delta

The impact of Hurricanes Laura and Delta on the U.S. Gulf has led to a tight supply of some MDI intermediate chemicals.

Although the hurricane did not have a significant impact on the US Gulf MDI plant, the factories producing intermediate chemicals such as Aniline, nitrobenzene and chlorine were restricted.

Due to the closure of railways and waterways, logistics was also interrupted, which also led to restrictions on the supply of intermediate chemicals to the isocyanate plant.

According to data from the Chlorine Institute, since the outbreak of the coronavirus, the operating rate of chlor-alkali plants in the United States has been at a low point for many years, and the operating rate in September has fallen from August.

Westlake’s 1.29 million tons/year chlorine plant in Lake Charles, Louisiana suffered a long shutdown due to the impact of Hurricane Laura. Most areas of the location were out of power for several weeks, resulting in chemical production in the Lake Charles area Interrupted.

Carbon Monoxide problem

Recently, the shortage of carbon monoxide (CO) is also one of the reasons for the tight supply of MDI.

Chlorine reacts with CO to form phosgene, and then reacts with methylene diphenylamine (MDA) to form MDI.

Although the demand for MDI and downstream polyurethanes has been increasing, the shortage of these intermediate chemicals has reduced the operating rate of MDI in North America.

Demand rebound

MDI's consumption fell sharply during the strictest coronavirus-related restrictions on economic activities in the previous second quarter, and demand began to recover strongly in the third quarter.

In recent months, the operating rate of the automotive industry has risen sharply, as auto and auto parts manufacturers are working to replenish the supply chain, after the operating rate of the entire industry fell to its lowest level in history in April and May.

In recent months, as travel and entertainment expenditures have been delayed, consumers have spent a large part of their disposable income on home decoration, and the demand for home appliances has also increased.

The construction industry is also a strong growth point for MDI demand. As some home buyers choose large units in the suburbs instead of urban housing, residential construction activities have risen.

MDI is mainly used for polyurethane foam, accounting for about 80% of global consumption. Rigid foam is the largest export area of MDI and is used in construction, refrigeration, packaging and insulation. MDI is also used to make adhesives, elastomers, adhesives, sealants, coatings and fibers.

Major US MDI producers include BASF, Covestro, Dow and Huntsman.