TDI may enter the era of low profit

This year, the price of China's ** diisocyanate (TDI) has been declining. The traditional “Golden 9 Silver 10” landscape is no longer. Since November, the domestic mainstream market TDI price has fallen below the psychological threshold of 18,000 yuan (t price, the same below). The price of 20,000 to 22,000 yuan in the first quarter of this year is in sharp contrast. Due to the shrinking of downstream demand and the dramatic increase in domestic plant capacity, especially the recent production of 250,000 t/d of TDI project at Bayer, the domestic supply will increase significantly in the future, and the oversupply pressure will increase. With the further release of domestic production capacity in the future, TDI may enter the era of low profit.

Insufficient sales of downstream products In the first half of the year, due to the surge in international demand, TDI performed well, and even the tight supply of stock in the Middle East and Africa. Driven by the external disk, China’s TDI market prices have remained above 20,000 yuan. Since the second half of the year, domestic TDI prices have been falling all the way. From September to October this was the traditional sales season for TDI and other chemicals, but this year the “Golden 9 Silver 10” boom was no longer the case. The TDI market continued to be sluggish. In early October, the transaction price fell below 18,500 yuan, and it remained low for a long time. The analysis data from CITIC Securities shows that in October this year, China's TDI prices dropped by 19.6% year-on-year. Except Yantai Wanhua, the performance of other polyurethane-related listed companies was lackluster, and many manufacturing companies suffered serious losses.

Market analysts analyzed that the current round of TDI decline was mainly caused by insufficient downstream demand. Since the second half of the year, due to the sluggish property market in China, polyurethane building insulation materials have been pressured by policies, and downstream companies have encountered financial difficulties, which have seriously affected TDI market demand. Xu Yekang, a market analyst at Tiantian Chemical Network, said at the 2011 China Automotive Industry Polyurethane Application Summit Forum that sofas, mattresses and other upholstered furniture and automotive industries are the two most important end-use requirements for TDI products, with market share accounting for 57.7% and 11.4%. This year, the two traditional pillar industries of real estate and automobiles failed to continue the past fiery market, which led directly to the ineffective domestic sales of TDI's downstream products.

Excessive pressure is increasing. Lu Guan, deputy secretary-general of the China Polyurethane Industry Association, told reporters that the current international chemical giant is actively deploying TDI devices in China. BASF has 160,000 tons of TDI equipment in China. On November 16 this year, Bayer will produce 250,000 tons of gas annually. **After the TD-SCDMA plant was put into operation in Shanghai, domestic TDI production capacity surged. Lv Congress said that compared with domestic devices, the multinational TDI production process is not only more energy-efficient and environmentally friendly, but also has a relatively low cost. Therefore, domestic Wanhua and other companies are also interested in causing advanced foreign TDI production processes and equipment, and domestic TDI production capacity. Will continue to increase.

Xu Yekang predicts that China's TDI production capacity will reach 690,000 tons this year, an increase of 56.8% from 2010's 440,000 tons, while output is expected to be 479,000 tons, an increase of 18.2% over the previous year's 405,000 tons. Shanghai BASF, Yinguang Chemical, Zhangzhou Dahua, and Bayer (Shanghai) will be among the top four domestic producers with 155,000 tons, 98,000 tons, 85,000 tons and 72,000 tons.

In terms of market demand, Xu Yekang believes that in 2011, the demand for TDI downstream auto industry was weak, and the soft furniture industry experienced negative growth. The demand for coatings, adhesives and other industries was relatively stable. On the whole, the demand for TDI products will show an inflection point this year, and the trend of slowdown will be obvious.

According to Xu Yekang’s introduction, before 2008, the annual growth rate of China’s TDI consumption maintained at 8% to 10%; in 2009 and 2010, the growth rate increased to 15% and 17% respectively; however, the growth rate in 2011 slowed down significantly. He expects that the demand for TDI this year will increase from the 566,000 tons last year to 562,000 tons, with the growth rate only about 1.3%. Among them, the demand for soft foam polyurethanes, coatings, adhesives and sealants, elastomers and plastic runways will be 376,000 tons, 98,000 tons, 40,000 tons and 40,000 tons respectively, ranking the top four in the TDI market consumption. Bit.

After the market outlook may continue to trend down the outlook for TDI, Xu Yekang predicts that China's TDI market will gradually enter a state of oversupply, and the price fluctuation interval will shrink. Therefore, the market will be difficult to make improvements in the short term and may enter the era of meager profits.

A person in charge of a TDI production company in Shanghai told the reporter that due to the optimistic expectation of the long-term polyurethane market demand, many upstream polyurethane manufacturers in China, such as TDI, have plans to expand production, even if the equipment is under-employed due to poor market conditions in the short term. However, as companies generally hold the hope that TDI prices will return to highs, once the downstream market improves, domestic manufacturers will fully seize the TDI market. Therefore, it is not surprising that oversupply will occur in the short term.

"If the market is not expected to be good, Bayer will spend a huge sum of money on Shanghai's 250,000 tons of new process TDI devices?" He predicted that before the end of this year, the market will continue to maintain the downward trend, but in the "New Materials Industry" With the upcoming "Five Development Plan" and other policies and market factors, the TDI market will improve after the Spring Festival next year.

Treasure Island market analyst Xie Zhenyang also believes that in the short term, not only the domestic TDI market has sufficient supply, but also the TDI manufacturers' equipment is basically in normal operation, and there is no maintenance plan, and inventory keeps rising. With the large number of imported TDI coming to Hong Kong, the domestic TDI price war has intensified. With the production capacity of 70,000 tons/year in Yanzhou Dahua and 50,000 tons/year in Yantai Juli, it will enter the market by the end of this year or early next year. The overcapacity situation of TDI will be even more serious.