The price of diphenylmethane diisocyanate (MDI) and toluene diisocyanate (TDI) in North America unexpectedly fell sharply in 2018 due to changes in supply and demand balance.

However, thanks to the commercial sales of Saudi Sandal's MDI and TDI units and the resumption of production of the TDI unit at BASF Ludwigshafen, supply tensions that plagued the isocyanate market in 2017 disappeared in 2018. In addition, buyers are beginning to look for alternatives that cut global demand. In particular, weak consumer demand growth in Asia has also helped to expand supply in other regions as many Asian exporters have increased their exports to North America and Latin America in order to increase profitability.

The supply of these isocyanate products continued to be tight in 2017, resulting in a significant increase in prices compared to the previous year. According to ICIS statistics, in 2017, the US TDI price increased by 75 cents/lb (about US$1,653/ton), and the MDI price increased by 53 cents/lb (approximately US$1,168/ton).。

Market analysts said that the reason for the extremely tight TDI supply in 2017 was mainly due to the extended shutdown of BASF's new 300,000 t/y TDI plant in Ludwigshafen, Germany, and the 200,000 t/m of Saudi Shadar's new construction in Jubail. The TDI plant was delayed in production. The two TDI plants account for about 15% of the world's total capacity. Their unexpected absence from the market has caused tight supply in the global TDI market, leading to continuous price increases in 2017.

The 2017 MDI market is also facing a continuing supply shortage. Shadar’s new 400,000 tonne/year MDI unit in Jubayl, Saudi Arabia, also experienced a long delay, and commercial sales began only a few months after its launch in June 2017. At the same time, the rapid increase in global MDI demand is also the reason for the tight supply in the market. As market supply growth lags behind product demand expansion, industry insiders believe that the structural tension of the MDI market will be a market feature in the next few years.

TDI buyers in North America also noted that the consumption of isocyanates in the furniture and bedding industry has slowed down, and the demand in the automotive industry has entered the expected decline channel after several consecutive years of rapid growth. In the North American MDI market, there is a significant spread in aggregate-grade MDI (PMDI) and monomer-level MDI (MMDI). There has been an oversupply of PMDI supply, especially as supply concerns have eased and downward pressure on prices has occurred since the increase in Asian goods. At the same time, MMDI supply remains tight, leading to continued MMDI prices and expanding the premium of MMDI over PMDI.

US-China trade disputes have caused participants in the MDI and polyol markets to worry that China's reduced imports of these products will change the balance of supply and demand in the North American market. Relevant institutions predict that by 2019, TDI supply may be surplus, resulting in price downside。

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