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Home | News |Feature I Wanhua Chemical: from MDI Tycoon to Integrated Giant
Feature I Wanhua Chemical: from MDI Tycoon to Integrated Giant
Updated: 2017-07-13 17:01 Source: PUWORLD Exclusive share:

PU World--There is currently an ongoing shortage in the China polymeric MDI market, with prices rising by more than 20% in June, and expected to go further in this month. To date, spot prices of polymeric MDI are around Rmb 26,250/ton in the domestic market, 20% more over last month’s figure. Although all units in the country are operating normally for now, the supply control by some producers are causing temporary outage in the marketplace, feeding to the traditionally price pushes by producers and traders in the now peak season.

MDI production capability for a long time has been the privilege of very few chemical giants in the global market; generally speaking, high margins are expected in the near future. There is currently a global capacity of around 6,000ktpa for MDI production, growing at the CAGR of around 7% in recent years. There is also an estimated yearly growth of demand across the world by around 400ktpa. In 2017, Saudi Arabia and China both saw a major unit started in the country, namely Sadara in Jubail and SLIC in Shanghai, however, considerable time is almost always needed for new plants to ramp up their output, meaning in the short term they are yielding at limited volumes. Meanwhile, there are currently almost no capacity expansion planned in the coming few years throughout the globe, while more the 50% of the existing units have service lives of more than 20 years, amplifying the possibility of potential force majeure incidents. This high technical demanding and investment intensified industry is now a de facto monopolized play ground, thus maintaining high profitability.

This is what we have learned about Wanhua’s idea of development:

1. Wanhua Chemical plans to build a new MDI production facility in North America with a capacity of 400ktpa, preliminary work of the project is heard to be going well. MDI demand in the US has been growing at 10% per year for 3 consecutive years, while all existing units in the country have been operating for more than 20 years, meaning the US being of great market potential for MDI.

2. Since the second half of 2016, Wanhua’s chemical complex centered around its 750ktpa PDH (Propane dehydrogenation) facility has been operating smoothly, running at full rates most of the time while its propylene, PO (propylene oxide), acrylic acid and acrylic ester production have maintained high margins. In 2016, Wanhua Chemical acquired a voice in the Saudi’s LNG CP pricing, as the only Chinese company that has his privilege so far, and is deep into LNG trading while benefiting from the 1 million cubic meter natural cave used as LNG storehouse under its industrial park in Yantai, Shandong.

3. Wanhua is also forward integrating into TPU, SAP, PC, specialty amines, water based coating resins and modified MDI, all fields currently growing rapidly and with high value added. Wanhua’s Phase I 30ktpa SAP unit has started production in 2016, while its first 70ktpa PC unit is expected to kick off in Q3 2017, and to expanded to 200ktpa by the end of 2018.


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