Isocyanate stress relief in North America

Prices of diphenylmethane diisocyanate (MDI) and toluene diisocyanate (TDI) in North America fell sharply in 2018 due to changes in supply and demand balance. However, thanks to the commercial sales of MDI and TDI devices from Saudi Arabia's Shadar Company and the resumption of production of TDI devices in Basf Ludwig Harbour, the supply tension that plagued the isocyanate market in 2017 disappeared in 2018. In addition, buyers began to seek alternatives, cutting global demand. In particular, weak growth in consumer demand in Asia has also helped to expand supply elsewhere, as many Asian exporters have increased their exports to North American and Latin American markets in order to increase profitability.

The supply of these isocyanate products continued to be tight in 2017, resulting in a significant increase in their prices compared with the previous year. ICIS statistics show that TDI prices in the United States rose 75 cents per pound (about $1653 per ton) in 2017, while MDI prices rose 53 cents per pound (about $1168 per ton) in the same period. Market analysts said that the main reasons for the extreme shortage of TDI supply in 2017 were the prolonged shutdown of the 300,000 tons/year TDI plant built by Basf in Ludwig Port, Germany, and the delay of the 200,000 tons/year TDI plant built by Saudi Arabia in Jubail. These two sets of TDI plants account for about 15% of global production capacity. Their unexpected absence of markets has resulted in tight supply in the global TDI market, leading to a continuous rise in prices in 2017.

In 2017, the MDI market is also facing sustained supply constraints. The start-up of Shadar's 400,000-ton/year MDI plant in Jubail, Saudi Arabia, also experienced a long delay, and commercial sales began only a few months after its launch in June 2017. At the same time, the rapid growth of global demand for MDI is also the cause of tight market supply. As the growth of market supply lags behind the expansion of product demand, industry insiders believe that structural tension in the MDI market will be the market characteristics in the next few years.

TDI buyers in North America also noted that the consumption of isocyanate in furniture and bedding industries has slowed down, and demand in the automotive industry has entered the expected decline after several years of rapid growth. In the North American MDI market, there is a significant price gap between aggregate MDI (PMDI) and monomer MDI (MMDI). PMDI supply has been oversupply, especially as supply concerns eased and price downward pressures have arisen as goods from Asia increased. At the same time, the supply of MMDI is still tight, leading to MMDI prices continue to rise, and expand the premium of MMDI to PMDI. The U.S. -China trade dispute has led participants in the MDI and polyol markets to fear that China's reduced imports of these products will change the balance of supply and demand in North America. Relevant agencies predict that in 2019, TDI supply may be excessive, resulting in lower prices.