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Home | News |Major Chinese TDI Producer, Cangzhou Dahua Points out Current Price Shock in China
Major Chinese TDI Producer, Cangzhou Dahua Points out Current Price Shock in China
Updated: 2017-08-16 15:09 Source: Cangzhou Dahua share:
PU WORLD--Cangzhou Dahua, one of the biggest TDI producers in China issued an announcement on August 16th, pointing out that there is a major on-going price shock in the market of its main product, TDI. The producer also noted that market speculation could not be ruled out as a factor in said shock. Cangzhou Dahua estimated that by the year 2018, with Whanhua Chemical and Shandong Juli’s two TDI production units commissioned, total domestic production capacity of TDI will reach 1,200ktpa, likely to exceed market demand at the time.

In the announcement, it was also mentioned that since the beginning of August, under factors from both supply and demand, TDI prices significantly increased. Current rate of TDI is at Rmb 39,000/ton (duty paid), while the producer is offering at Rmb 38,000/ton EXW, duty paid.

According to analysis in the announcement, in June, due to maintenance shutdown of other producers and increase in demand from downstream, TDI market begin to rebound. By the end of June, TDI market price was at around Rmb 31,500/ton (duty paid). With market entering into traditional peak season in August, demand itself has also risen up by degrees.

Regarding overseas markets, the announcement noted that European market is experiencing shortage while major Korean producers suffered from production issues that led to low operational rates and reduced supply. In this case, major domestic producers increased their exports which resulted in the decrease of domestic supply. Under the factors both domestic and overseas, TDI market prices in China continued to increase considerably.

The announcement noted that Cangzhou Dahua believes that the major fluctuation of TDI prices is due to shifts in supply/demand balance and trade competitions. Looking into the future, with other producers resume from maintenance, there is great uncertainties whether Cangzhou Dahua’s TDI prices and also demand from downstream will remain at the current level. And that certain degrees of speculation could not be ruled out as a cause of the current high price level.

The announcement also noted that future additional capacity may increase the risk of price drop. The producer estimated that by 2018, Wanhua Chemical’s 300ktpa TDI production unit will be brought online. Additionally, Shandong Juli’s 150ktpa TDI plant is also under construction. The commissioning of the two units will mark the total domestic TDI capacity reaching 1,200ktpa and above. By then, production capacity of TDI in China will likely exceed domestic demand.

Raw material wise, as mentioned in the announcement, between the end of July and the beginning of August, toluene, a major raw material of TDI was in shortage due to planned or unplanned production issues and weather condition in South China; the market prices of toluene in China moved up twice. Given the cost increase of the major feedstock, whether current margins of TDI production will be sustainable in the future is highly uncertain. 

 

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