Toluene diisocyanate prices began to rise again on September 28, up 1.3%, quoted at 19601 yuan/ton, a cumulative increase of 30% since August 3. After this period of increase, TDI price has been close to the high point of 19,800 yuan / ton in February this year. Under a conservative estimate, the average annual growth rate of TDI demand in the next few years will be around 5.52%. Looking ahead to the second half of the year, chemicals will usher in the two main lines of internal and external recovery, and the volume of China’s chemical exports to Europe will increase significantly.

Specifically for listed companies, Wanhua Chemical announced that since October 2022, Wanhua Chemical Group Co., Ltd.’s listed price for polymeric MDI in China is RMB19,800/ton (up RMB2,300/ton from September price); the listed price for pure MDI is RMB23,000/ton (up RMB2,000/ton from September price).

A total of 32% of energy-intensive companies were forced to cut all or part of their production due to the sharp increase in European natural gas prices, which indexed to twice the industry-wide average. European MDI and TDI production are both more than a quarter of the global production, and European and American chemical plants MDI and TDI produce a supply gap.

Agencies point out that natural gas prices are expected to remain high against the backdrop of increased uncertainty over European gas imports. Natural gas is an important industrial energy source and raw material for some chemicals in Europe. The current European production capacity accounted for a relatively high variety of vitamins, methionine, PVP, MDI, TDI, m-cresol, etc. For the relevant domestic enterprises, on the one hand, is expected to benefit from the regional price increases of important chemicals in Europe transmitted to the global price increase revenue, on the other hand, you can use the relatively low cost of domestic raw materials to increase the competitiveness of overseas exports.

Guoxin Securities research report mentioned that pure MDI, as of September 8, Shanghai sources offer concentrated 18,200-18,800 yuan / ton, imported sources offer concentrated 18,200-18,800 yuan /. TDI, into 2022, the intensification of geopolitical conflicts or extreme weather led to a significant intensification of the European energy crisis, European chemical companies will continue to be subject to increased energy costs and raw material shortages The negative impact of the recent, Europe – China market TDI spread has continued to expand to more than $1400 / ton. At present, the pressure of TDI inventory in the middle and lower reaches is not big, but the digestion of terminal demand is still slow. Analysts suggest actively paying attention to the operation of overseas devices and the export posture of domestic manufacturers.

From the perspective of medium and long-term demand, MDI, the global demand for MDI has continued to grow in the past 10 years, from 4.65 million tons in 2011 to 7.385 million tons in 2020, with a CAGR of 5.27%, higher than the GDP growth rate in the same period, and the demand is forecast to grow at a compound growth rate of 5% (within the range of 4%-6%) in the next 5 years. The demand for MDI is expected to grow at a CAGR of 5% (4%-6%) over the next five years. Under conservative estimates, analysts have calculated that the average annual growth rate of TDI demand in the next few years will be around 5.52%.

Looking ahead to the second half of the year, the chemical industry will usher in the two main lines of internal and external recovery, due to the current high energy prices in Europe gradually conduction to chemical products, European chemical product prices to improve, domestic chemical prices and European prices continue to widen the gap, coupled with the price of sea freight back down, analysts believe that the volume of Chinese chemical exports to Europe will increase significantly.

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