Analysis of Polymetric MDI Market in Q3, 2017

Introduction: In Q3, 2017, the Chinese polymetric MDI market mainly showed an uptrend. The tight supply was the major reason.

The average price of polymetric MDI waa RMB 29,852/mt in Q3, 2017, which increased 33.41% from last quarter and 58.17% from the same period of last year. The tight supply was the major reason.

The polymetric MDI market jumped in early July first and then moved down in mid-July. At the end of July, the polymetric MDI market rebounded. 

Bullish Factor: At the beginning of July, polymetric MDI producers controlled the sales volume, and the imported supply was limited. Traders raised offers greatly. At the end of July, the 600kt/a unit at Yantai Group was expected to undergo maintenance in August, the speculation sentiments were high. Some traders raised offers and were unwilling to sell goods. At the end of July, BASF published the posted prices in August, and the posted prices increased by RMB 3,000/mt to RMB 26,000/mt.

Bearish Factor: In mid-July, downstream users showed high resistance to the goods with the prices increasing. The supply increased slightly and traders were cautious about the market.

The polymetric MDI market mainly increased in August.

Bullish Factor: In H1 August, the overall supply was tight. The 600kt/a unit at Yantai Wanhua started to undergo the 12-day maintenance. Moreover, the MDI unit at Wanhua Bosu was shut. Units at BASF Mitsui was shut on fire. The 200kt/a unit at Tosoh underwent maintenance. Producers raised prices of September. At the end of August, the prices of polymetric MDI reached above RMB 30,000/mt.       

Bearish Factor: Up to August 21, the mainstream negotiation prices reached RMB 29,000-30,000/mt, hitting a new high. However, the downstream demand was influenced greatly. Traders and downstream users showed low interest in buying.

The polymetric MDI market boomed first and then fell in September.

Bullish Factor: In H1 September, the supply was tight. Influenced by the hurricane, the supply in the international market was tight. Traders raised prices. At the end of September, BASF raised posted prices of October by RMB 4,000/mt to RMB 39,000/mt. With the coming National Day holiday, the demand was thin.

Bearish Factor: As the market prices increased rapidly and greatly, downstream users’ production cost increased. In mid-September, Wanhua Group started to increase the supply to agencies. Posted prices increased and traders had to cut down prices. With the supply increasing, the market showed a downtrend.