The Chemical Giant Has An Accident! 300,000 Tons/Year Production Capacity is Affected

Recently, the international chemical giant Covestro announced that its 300,000 tons/year TDI unit in Germany had a force majeure event due to chlorine leakage, and it is expected that the supply will not be restored before the end of November.

"At the moment, the TDI industry is transitioning from a low season to a peak season. The shutdown of TDI manufacturers caused by this overseas accident has made the originally stalemate game of supply and demand begin to tilt towards sellers, and some dealers have also increased their product quotations." TDI dealers told reporters.

An executive of a related domestic listed company also said in an interview with reporters: "This overseas emergency has affected a large production capacity, and it is expected that there will be a certain gap in the global supply of TDI in the short term. The traditional peak season of TDI is expected to take advantage of this. It came earlier, and with the recovery of TDI product sales and selling prices, the company's profitability is also expected to further improve."

Data shows that since the overseas incident, the domestic TDI market price has generally risen by more than 1,000 yuan, reaching 16,700 CNY/ton, and some dealers' quotations have exceeded 17,000 CNY/ton.

As an important organic chemical raw material, TDI is widely used in flexible foam, coatings, elastomers, adhesives and other products. Among them, flexible foam is the largest consumption area, accounting for more than 70%, while the terminal demand of TDI is concentrated in Upholstered furniture, coatings and automotive industries.

Since Wanhua's 300,000-ton plant was put into operation in 2019, the TDI industry has been sluggish for several years due to sufficient supply. The spread of the epidemic in the first half of the year made the TDI market, which had improved at the beginning of the year, hit again. And the third quarter is catching up with the industry's traditional off-season, and the sluggish TDI market has not had too many waves.

"The TDI market at the beginning of this year is not bad, including manufacturers, distributors and downstream enterprises, the inventory is not high, and the commodity environment is relatively friendly. However, the spread of the epidemic has severely hit the downstream demand for TDI, and the domestic TDI price has increased from 19,800 in February. The high level of CNY/ton continues to fall." A TDI dealer told reporters.

"Since August, although the price of TDI has continued to drop further, it once fell to 15,500 CNY/ton in early August. However, this time is the transition period of the industry from the off-season to the peak season, and the game between supply and demand is in a stalemate. , the inflection point of the TDI market has been looming. At this time, the sudden accident of overseas enterprises has made the game of supply and demand tilted towards the sellers. Many downstream enterprises have begun to actively inquire and stock up, and manufacturers and distributors have also increased their product quotations.” The aforementioned distribution business said.

At the same time, the international energy price remained high, while the energy price in the domestic market was relatively low, resulting in the price gap between TDI in the domestic and foreign markets once reaching more than 10,000 yuan.

"Although domestic demand has been affected to a certain extent, the export of TDI products has been relatively good this year, and the volume and price of export orders have remained good. This overseas accident will lead to a gap in the global supply of TDI, and the traditional peak season of TDI is gold, silver and silver. It is expected to come earlier." An executive of a related domestic company told reporters, "This is definitely a positive factor, and the company is also expected to gain more market share. Profitability will also help.”

Some analysts pointed out that after the downturn in the first half of the year, it is expected that TDI demand will recover in the second half of the year, coupled with the reduction in supply caused by overseas emergencies and the difference in cost and price at home and abroad, domestic TDI enterprises are expected to take advantage of production capacity to quickly To seize market share, its profitability is also expected to be further improved.