China’s TDI Market

TDI supply remained stable and ample as facilities operated normally. However, demand remained weak. New orders were limited and buyers sought lower prices, putting downward pressure on the market. Moreover, frequent news on U.S. tariffs during the month obviously dampened market sentiment. Under selling pressure, traders offered discounts, which continuously pushed the market downwards. In mid to late April, positive supply chain news was continuously released: BASF Shanghai’s April TDI settlement price wasn’t lower than CNY 11,000/tonne; Covestro Shanghai stopped trading TDI; Wanhua Chemical reduced its TDI supplies; Heshan Juli suspended TDI supply in some regions due to low inventories and shut down its TDI facility on April 18. Stimulated by these news, downstream manufacturers showed higher purchasing enthusiasm and increased purchases moderately. This triggered a slight rebound in TDI prices. But considering cost pressures, most traders still took a cautious approach and maintained stable prices. The trading atmosphere remained lackluster. On April 30, the reference offers of TDI in East China: Shanghai goods: stood around CNY 10,800-11,000/tonne in cash in drum; Other Chinese products: stood around CNY 10,600-10,800/tonne in cash in drum.

After the May Day holiday, Covestro raised prices again, leading to divergent trading opinions. Some traders maintained low offers, while others began quoting higher. The price spread expanded. On May 9, the reference offers of TDI in East China: Shanghai goods: stood around CNY 11,200-11,600/tonne in cash in drum; Other Chinese products: stood around CNY 11,000-11,200/tonne in cash in drum.

Looking ahead, the market is expected to continue trending moderately higher. As current TDI prices remain below the breakeven point, suppliers determine to support higher prices. Besides, scheduled maintenance at Shanghai plants and postponed commissioning of Wanhua Chemical’s second-phase project in Fujian make traders become more cautious. Some traders intend to raise prices. However, demand for TDI remains muted. The market is expected to be in a stalemate between supply and demand in May. Major distributors will generally follow suppliers’ pricing and smaller traders will adjust their prices flexibly according to their own conditions. The market may rise, then decline before going strong again. Continued attention should be paid to changes in suppliers’ inventories and supply volumes as well as traders’ purchase cost.

Source: www.pudaily.com