Strong growth in global and North American demand for diphenylmethylene diisocyanate (MDI) and the low cost advantages of energy and raw materials in North America have stimulated a new upsurge of MDI expansion in the United States. New MDI capacity in the United States could change trade flows and the balance between supply and demand in the market in the coming years.

BASF plans to increase its MDI production capacity in Gaithma, Louisiana, from 300,000 tons per year to 600,000 tons per year by 2020. Cosmic plans to build a 500,000-ton/year MDI plant in Bay, Texas, and is expected to start production in 2024. When the device is started, Cosmic will shut down the existing 90,000 tons/year device, bringing its total MDI capacity in North America to 740,000 tons/year. On November 16, Wanhua Chemistry, headquartered in Shandong, China, announced that it had chosen Convent, St. James's parish in Louisiana, as the site of its new 400,000 tons/year MDI project. The device is expected to start construction in 2019 and put into operation in 2021. These three capacity expansion projects will add 1.1 million tons per year of MDI capacity to the United States by 2024. According to Anxun's data, the total production capacity of MDI in the United States will be 1.46 million tons per year in 2018, and the construction of this new device will increase the total production capacity of MDI in the United States by 75% in the next six years.

Robert Picock, a market analysis consultant, said that demand for MDI in North America grew at an average annual rate of 7% between 2011 and 2017, and it is expected that demand for MDI in the region will grow at an average annual rate of slightly less than 5% over the next five years. Picock pointed out that the new supply of MDI in the United States could reduce the average operating rate of MDI devices in North America to about 80%, and the price of MDI in the region would be subject to downward pressure. Market analysts predict that demand for MDI in North America will absorb all new U.S. production capacity by 2030.

"As new MDI production capacity in North America comes into operation, imports of up to 200,000 tons per year in the region may be replaced," Picock said. However, Asian MDI may continue to be exported to the West Coast market of the United States, because the cost of MDI logistics from Asia to the West Coast market of the United States is lower than that from Texas and Louisiana to the West Coast market of the United States.

The United States will continue to maintain its status as a net exporter of MDI. Most of the MDI products exported by the United States will be exported to Canada, Mexico and South America.

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