Summary of Polyurethane Market in July, 2017

1.The Chinese MDI Market Showed an N-Shaped Trend in July 2017

The average MDI market price was RMB 24,832/mt in July 2017, which was up 11.5% M-O-M or 108.42% Y-O-Y.

The MDI market showed an N-shaped trend in July. The MDI market increased greatly at the beginning of July. From the middle to the end of July, it declined first and then increased. Up to July 31, the Chinese MDI mainstream negotiation price was at the range of RMB 26,000-27,000/mt, which was up RMB 3,100/mt or 13.25% M-O-M. The price mentioned above was delivered price or self-delivery price with VAT.

At the beginning of July, the MDI supply was tight in the spot market because MDI factories sold goods to the market strictly and import goods were few. As a result, traders increased MDI quotations and the MDI mainstream negotiation price increased greatly.

In mid-July, the MDI market decreased. Firstly, with the MDI prices being in a high level, downstream users showed resistance to high prices. Secondly, the supply of MDI in Chinese market will increased in August, which will release pressures on MDI spot market. Therefore, traders lacked confidence and chose to sell goods to the market actively. As a result, the MDI market decreased in mid-July.

In late July, as Wanhua planned to overhaul a 600kt/a unit in August and MDI exports increased, the supply of MDI in Chinese market was tight. Traders were bullish about the MDI market and few of them sold goods at low prices. As a result, the MDI negotiation price increased significantly.  

In August, the unsettled price of MDI produced by BASF will be RMB 26,000/mt, which will be up RMB 3,000/mt. The MDI quotation will be at the range of RMB 26,000-27,000/mt.

2.TDI Market Increased Dramatically in July 2017

The TDI market continued increasing greatly in July.

At the beginning of July, the TDI market was in a downtrend. With the TDI market price decreased to a low point, factories went into operation timely. Inquiry interest of downstream users moved up, but the selling amount was still tight. The reason was that players showed a bullish attitudes to the TDI market, and many quotations were in a high level.

In mid-July, as the TDI market price increased to RMB 30,000/mt, downstream users showed resistance to high prices, and the TDI market was light. Only TDI market in South China continued increasing influenced by the tight TDI supply, and market price in surrounding areas followed. Although TDI import supported the market, the overall amount of TDI was thin. TDI factories controlled to sell goods, and orders in downstream were flexible.

In late July, the TDI ex-works price continued increasing and players were bullish about market.

Up to July 31, the Chinese TDI mainstream negotiation price was RMB 32,500/mt, which was up RMB 9,900/mt or 43.81% M-O-M. The negotiation price of TDI produced by BASF was RMB 33,000/mt, which was up RMB 10,100/mt or 44.1% M-O-M.