Toluene DiIsocyanate Price Trend and Forecast
North America
Riding on the back of curtailed supplies of toluene feedstocks and TDI on continued hurricane-induced production outages in many refineries and their downstream facilities located in Louisiana led the TDI prices to stay inflated during October and November in North America. The astonishingly high enquiries from the downstream polyurethanes sector worried the manufacturers who struggled to deliver the committed contracts. Additionally, the supply chain woes added to the burden of the manufacturers and the procurers alike during the quarter. Despite the recovering production output and the buildup in the upstream crude oil inventories in the second half of November, the prices for TDI remained firm on high demand from the end-user upholstery, construction and paints & coatings sector leaving no room for buyers to negotiate. The last assessed TDI prices in December stood around USD 4595/MT on FOB basis.
Asia
The impact of logistical issues and port congestion coupled with the limited availability of feedstock in Q4-2021 induced additional cost support to the offered quotations for TDI in the Asian market. The robust spot enquiries in China amid the slump in TDI productions due to the government’s “Dual Control Policy” caused the market players to fret over losing competitiveness. A small respite with the decrease in feedstock prices with the internationally recovering upstream inventories, and underwhelmed demand in the automotive sector was reflected in the form of short-lived stability, however, the general price trend remained buoyed with multiple height gains, reaching USD 2417/MT FOB Qingdao in December. In India, the TDI prices peaked at the highest value during October with a surge in regional demand due to enhanced festive period sales and limited imports from China and Europe. However, the down treading toluene feedstock futures allowed the downstream buyers to stockpile inventories during November and December. The prevailing stock clearance sentiments among the Indian traders encouraged them to offer low contract prices which caused the TDI prices to hover around USD 2912/MT Ex-Mumbai during December.
Europe
The prolonged toluene feedstock shortage and irregular imports created an extreme tightness in the TDI supplies in the European market. The demand fundamentals shot up reaching extremities that could not get satiated by the domestic inventories, thus giving rise to several order cancellations. The relaxation in port mobility and weakened feedstock market towards December brought a small relief in the prices. Yet, the consistent offtakes in the downstream industries maintained upward pressure on the European TDI market. Retracting from record-high levels, the TDI prices in Germany ranged around USD 3310/MT FD Hamburg during December.
For the Quarter Ending September 2021
North America
The prices of Toluene diisocyanate rose effectively during the third quarter of 2021 in North America. Unperturbed demand surge from the downstream sectors coupled with production outages has disrupted the normal TDI market dynamics in the region. BASF, a key producer of TDI announced force majeure in the aftermath of hurricane Ida which caused the complete shutdown of its Geismar, Louisiana plant in the US. As a result, TDI prices have been on the continuous rise for a major part of the year. Demand remained firm from the downstream industries including paints and coating, building and construction, and several others.
Asia Pacific
The overall market of Toluene Diisocyanate witnessed an upward trajectory in the Asia Pacific region in Q3 2021. In India, the prices of TDI showcased a steep rise during the first week of July, bolstered by stable demand dynamics in the country amid crippled supply activities in the international market. CFR Kandla (India) pricing observed an uptrend by escalating from USD 1984/MT to 2181/MT during the quarter. BASF announced a temporary shutdown on its Louisiana based TDI facility due to the disruption caused by Hurricane Ida. Moreover, scarcity of feedstock compelled BASF Shanghai to temporarily turn down its TDI facility in China. All these disturbances were collectively responsible for a significant hike in the price trend of TDI in the country.
Europe
During the second quarter of 2021, the TDI supply outlook remained unchanged from June due to disrupted production and scarcity of raw materials in the European region. Covestro a leading producer was running its European units at reduced prices in order to complete maintenance. BorsodChem was due to start planned maintenance at its MDI unit in Kazincbarcika, Hungary in Q3. In terms of demand, some market players reported that demand was still strong during the quarter, particularly from the downstream construction sector. The pricing of TDI was last assessed at USD 990 per MT FOB Texas in September.
For the Quarter Ending June 2021
North America
The supplies in the North American region improved in comparison to the previous quarter owing to the restoration of the industrial infrastructure in the USA Gulf Coast, after the devastating impact of the polar storm. In second half of the quarter several production issues erupted at major TDI plant marginally hindered the supply fundamentals. Demand observed gradual improvement from the downstream paints and coating, and several other end use segments as the region witnessed seasonal hike in building and construction activities. However, the prices witnessed an uptrend with FOB Texas prices reaching USD 3840 per tonne in June.
Asia Pacific
Overall, the market outlook in Asia Pacific slumped during the second quarter of 2021. Supplies were constrained in the Northeast Asian region as crackers were shut in South Korea Kumho Line 3 and Japan’s Mitsui Chemicals plant due to the scheduled turnarounds in the second quarter. In China, government-imposed consumption tax on several imported heavy aromatics commodities. The tax was followed by the increment in freight rates due to container shortages and difficult trading environment. Offtakes were narrowed as the demand from PU segment witnessed decline due to off season sentiments, however situation eased with revival in construction activities. As a ripple effect the prices at Ex-Work Nanjiang settled at USD 2029 per tonne in June.
Europe
During the second quarter of 2021, supply remained tight in the European region owing to the delay in resumption in BASF Ludwigshafen plant in Germany in the second half of the quarter. However, the influx of the volumes from US enhanced the supply outlook. Demand was on a downward trajectory amidst feeble offtakes from flexible foam industries due to the offseason period. Prices fluctuated in a stable to firm range amidst the balanced supply demand ratio in the second quarter of 2021.
For the Quarter Ending March 2021
North America
TDI supplies remained tight during Q1 of 2021 as various plants reported maintenance outages during the H1 of the quarter. During mid-February, freeze weather conditions disrupted the production line in the US gulf region, which further resulted into surged spot prices of feedstock as well as TDI in the domestic market. Some plants located in Texas and Louisiana were affected by the winter storms. The demand surged for the downstream polyurethanes from the automotive sector which showed signs of rebounding. However, the hiked prices and supply disruptions inclined the offers especially destined to the Asian region.
Asia-Pacific (APAC)
The supplies were balanced in the APAC region, during the quarter, as the addition of new capacities in China inclined the production. However, most suppliers in the region were heard catering to the demand of feedstock Toluene from the western hemisphere for better netbacks in revenue. The demand from the APAC region surged throughout the quarter as the consumption rose amid improving automotive demand. The decline in imports of Toluene Diisocynate amid delayed deliveries from the US and unavailability of transportation freights, surged the CFR prices of Toluene Diisocynate in the Indian market, while maintaining an average of USD 1942/ton in Q1 of 2021.
Europe
During the Q1 of 2020, the supplies were tight in the European region, due to the imposition of lockdown, restricted mobility and economic activity which became restricted leading to the downfall in the regional consumption surged the demand regarding export purposes. The surging spot prices in feedstock Toluene, widen the arbitrage between US and Europe, followed by due to minimal transporting activities its consumption from automotive sector decline which further reduced the demand of TDI in domestic market.
For the Quarter Ending September 2020
Asia
After observing steep slump in its values in the previous quarter, Toluene Diisocyanate (TDI) fundamentals in the Asian market gradually improved by Q3 2020 against the backdrop of supply shortages from several western countries due to seasonal plant outages. Although TDI market sentiments in the Southeast Asian countries like India remained bearish as buyers restrained from indulging in new contract deals as they were expecting a further drop in prices. In India, TDI was traded at USD 1839 per MT in September, showcasing a drop by around 3.5 per cent from the previous quarter. To relieve the domestic production, the government of India announced anti-dumping inquest on TDI imports from China in late August. As major economies in Asia are continuously revising their market strategies to combat against the demand volatility, traders showcased optimism over improvement in its offtakes by the next quarter.
Middle East
Supply fundamentals of Toluene Diisocyanate (TDI) remained mixed in the third quarter of 2020. Producers were heard operating at increased rate on pick up in demand from flexible foaming application amidst the resumption in market activities due to relaxations provided in lockdown restrictions. However, several maintenance turnarounds in the second half of the quarter caused a supply shortage in the market, thereby compelling the end use industries to shift to the imported product. Many factories that earlier maintained low inventories were seen restocking ahead of the anticipated rise in seasonal demand.
North America
Ample stock of TDI in the US market against its slowed consumption from downstream industries continued to put forth downward pressure on its price fundamentals. In line with bearish demand outlook, BASF declared a force measure on TDI plant based in Louisiana. Although the situation relatively improved in comparison to the previous quarter with pickup in demand from bedding and furniture segments, it was not enough to revive the prolonged grim outlook of TDI in the regional market. Furthermore, demand for TDI from the automotive sector showed a substantial recovery but remained way below the pre-pandemic levels.
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