GCC PMDI prices receive fresh boost from plant troubles

Import prices of polymeric methyl di-p-phenylene isocyanate (PMDI) in the Gulf Cooperation Council (GCC) region got a fresh boost to multi-year highs due to supply shortages after two producers encountered plant troubles, market sources said.

In the week ended 2 March, PMDI prices gained $100-150/tonne week on week to $2,300-$2,400/tonne CFR (cost and freight) GCC, their highest level since April 2013, according to ICIS data.

Reduced production at Asian facilities that supply to the GCC market sent prices soaring.

On 23 February, Kumho Mitsui Chemicals (KMCI) reduced output at its 200,000 tonne/year MDI unit in Yeosu, South Korea due to insufficient supply of carbon monoxide (CO) from a domestic supplier.

On 1 March, BASF said that its MDI plant in Chongqing will be forced to shut down “due to unexpected issues with critical plant equipment of our syngas [synthesis gas] supplier".

Market sources said that the German producer's 400,000 tonne/year MDI plant at the site in southwestern China was shut on 27 February but this was not confirmed by the company.

"Our syngas supplier has informed us that they expect their syngas supply to resume on March 27 … We will restart our MDI plant as soon as syngas has become available," a company spokesperson said in an e-mailed statement.

"What this all means is that producers will re-allocate more cargoes to Asia and create tight supply conditions for the Middle East customers," said one trader.

Further gains could be forthcoming. Producers indicated they were hoping to increase prices further to around $2,500/tonne CFR GCC should the shortages persist.

"For now, we will wait. We will not offer just yet but we will also look to target $2,500/tonne," said one producer.

Buyers meanwhile were heard scrambling to secure cargoes before prices increased further. One buyer in the Middle East said it had existing offers at $2,300/tonne CFR and it hoped to quickly seal that deal before any further revision in prices.

"Given the conditions, I think we will not wait and will make our orders now," said the buyer.

PMDI prices have been on an uptrend since early January but the initial gains were largely driven by the rise in feedstock benzene prices.

But to put these prices into perspective, PMDI prices in Asia are still trading well above those seen in the GCC.

In the week ended 1 March, PMDI prices in Asia were about $500/tonne higher than GCC prices on a CFR basis.