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Home | News |High Prices of Polymeric MDI Decline,What Will the Market Be in a New Year?
High Prices of Polymeric MDI Decline,What Will the Market Be in a New Year?
Updated: 2018-01-02 16:51 Source: PUWORLD share:

Whether prices of black materials will further increase next year worries downstream enterprises most as 2018 is approaching. Prices of polymeric MDI have stay elevated for a long period of time near the New Year. Due to weak supply and demand, prices keep declining. However, the decrease is slight and prices maintain high, making downstream enterprises seldom purchase when prices drop while worrying that it will be difficult to get goods due to a rebound in high prices.

When talk about the market trend as 2018 is approaching, we cannot ignore the market condition of this year. Throughout 2017, prices of polymeric MDI fluctuate fiercely and the status of market supply varies at different stages.

During Q1 and Q2, the overall supply is relatively loose with continuously decreases in prices due to stable output of major producers in domestic market and the regular downstream slack season. Globally, most MDI units in foreign markets are old with low operation rates and likely to declare force majeure, resulting in sustained shortage in the market. In domestic market, suppliers take the initiative to raise export during the first half of 2017, making supply slightly exceed demand in the off-season. Though prices keep declining, the decrease gets smaller.

During Q3 and Q4, downstream market thrives. Demand in regular white goods market increases due to the better status of foreign export markets and more orders brought by the Christmas. Also, construction industries such as insulation market usher in the peak season. Large export is made in O3 on supply side as downstream demand sparing. Meanwhile, pure MDI goods stock up in Q3. Producers even lower the operation rate to reduce production. Supply levels off and even declines compared with the slack season, resulting in continuously increasing prices in Q3. Some enterprises reduce export in foreign markets and turn to the domestic one in Q4 under pressures brought by the policy. At the same time, downstream construction industries gradually prepare for an ending. Demand declines while supply improving, making prices fall in Q4. However, though prices drop when supply and demand remains weak, the decrease is slight supported by poor supply.

source : orisage

Form the chart we know that prices in polymeric MDI market shift with slight decreases at present.

However, we cannot make judgments about the future market merely by the price trend. Currently, supply side serves as the biggest risk of the market.

As the New Year is approaching, units are overhauled together in domestic market, leaving great issues for supply side.

Wanhua, the largest domestic polymeric MDI supplier, shut down Wanhua Ningbo’s units for maintenance, which is expected to last for 50 days for phase 1 (400,000 tons/year) since December. 1st and 45 days for phase 2 (800,000 tons/year) since December. 16th.The overhaul is based on routine maintenance of the annual plan and would not affect Wanhua’s production and operation. However, the news of maintenance still spurs the market.

BASRF, the second largest polymeric MDI supplier has declared force majeure on December 12th for BASF Chongqing’ s 400,000 tons/year units due to a syngas supplier’ s shortage of natural gas and also the supplier hasn’t offer a restart schedule temporarily.

At the same time, BASF is restricted by feedstock supply before then and thus the output remains low. It is said that a 40-day- maintenance plan has been made for the end of 2017. Plus, there is a natural gas dilemma. Therefore, it is expected that BASF Chongqing’ s units are unlikely to get back to normal supply levels in early 2018.

On demand side, despite refrigerator, auto and adhesive industry, other industries are in a slack season in general, which explains why prices are hard to raise recently.

Looking ahead, supply and demand remain weak in domestic market at present, resulting in lower prices with little possibility to increase. However, as the New Year is coming, demand of stocking up will occur in the market. Besides, though units in Korea have restarted production and Dow’ s import goods have arrived, supply issues are more serious on the whole. Poor demand continuously supports prices in the market. Also, terminal procurements are made when prices increase instead of decrease. Thus, we do not rule out the situation of rising prices driven up by tight supply when there is a supply shortage for future purchases.


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