Chinese EO Price Increased Frequently on Tight Supply in Nov 2017

Introduction

From Q1 to Q 3, the Chinese TDI market rose and fell rapidly. The downstream users got used to decreasing inventory and purchasing on a small amount. However, in November, players were bearish about the market, and downstream users held light inventories. In December, the supply of TDI will become tight and the demand will increase.

The production in sponge and shoes material industries will decrease in December. However, as the auto manufacturing industry will enter a peak season and the production in soft furniture industry will improve, the downstream demand for TDI will increase. In recent two weeks, the trade volume of TDI was not high. However, the downstream users purchased on a small amount consistently. Furthermore, the sales volume in downstream market increased and part of users began to stock TDI. The inventory in TDI factories was not high and had no sales pressure.

In early November, players were bearish about the Chinese TDI market. The sales volume of TDI in H1 November increased rapidly. The inventory of Chinese-made TDI was modest, while the supply of TDI produced by BASF was very scarce. The inventory can be released after BASF Shanghai completes the previous contract. TDI factories still delivered goods to the downstream users at first, and then delivered to traders. So, the supply did not increase rapidly in the spot market, and the prices were modest. As the TDI market was range-bound, part of prices became soft and can be negotiated. According to the figure above, the TDI prices stopped decreasing.

The TDI factories will have no inventory pressure, and players will hold a modest sentiment to the market. The downstream demand will be high. It is predicted that the TDI price will maintain stable.