PMDI Price Firm Overseas while Fluctuated with Uncertainty in China
2021-04-07    [Source:PUdaily]


Due to the impact of the disruption of the Suez Canal on logistics transportation in last weeks, the supply tight situation in European polymeric MDI market became worse. Last week, the April contract price of polymeric MDI in West Europe continues to move up. It is reported that the price negotiation is not easy, and the price increase is firm and not negotiable. Last week, the price without DEL of polymeric MDI in Western European market ran at EUR 2,750-2,950/ton, which was EUR 300/ton higher than that in March. MDI demand is healthy, which is expected to continue to benefit from the government's economic stimulus.


Southeast Asia

At the beginning of this week, mainstream MDI producers, such as Covestro and BASF, offered polymeric MDI steadily to Southeast Asia market at USD 3,000-3,100/ton.


South Korea

South Korea's supply-end ever expected the PMDI price in South Korea will move up in March and April. However, affected by the recent price fluctuation of polymeric MDI in China market, the price increase in South Korea is not as expected. At present, the market price (with DEL) in South Korea is stable at about KRW 3,100-3,400/KG.



Back to China MDI market, take polymeric MDI as an example, after the slow increase in the off-season in late January which went against the market trend and the sharp increase in middle of February, the market price of China polymeric MDI ceaselessly moved back and consolidated from late February to early April. On April 7, the offers of polymeric MDI in China was RMB19,200-19,500/ton, which had moved back to the price level on January 26. During the two-month period of sharp increase and fall back, not only did the market price move back, but also made the traders in the market more rational about the market.

                                    Market price trend of China polymeric MDI from 2018 to April 7,2021


Price Forecast in April


During the price moving-back period in March, most goods were sold out with a profit or stop loss by cashing out, which were opportunistic to be purchased by secondary market traders at low prices in the early stage (from January to February before the price surge). The settlement price in March and list price in April of major China producers, such as Wanhua, BASF and Huntsman, were still offering high (for example, the settlement price in March was higher than the recent market offer of about RMB 4,000-5,000/ton). It was general that the mainstream distributors purchase with high cost, especially after a wide decline range of several thousands in RMB last week. When they came back after the festival this week, the offer of mainstream distributors became more cautious and tangled.



In May, some MDI producers in Shanghai and Japan will do routine maintenance, other MDI producers are running at high operation rate as a whole. Although MDI plants in North America are gradually recovering from the cold-wave outbreak, the overseas supply market is still tight and the price is firm recently. It is expected that Chinese producers will maintain a certain amount of polymeric MDI exported to overseas markets from March to April.



Taking the downstream factories in the field of engineering construction in China as an example, the sharp increase of raw material prices in February had brought significant cost pressure to them. In addition, the previous safety incidents in some areas in Northern China had led to stricter local supervision on safety construction, which was another factor that had led to the work-resume delay of some engineering factories compared with previous years. In March, the overall trading atmosphere of polymeric MDI in the distribution market was sluggish, and downstream producers slowly consumed inventory. However, it was estimated that the current downstream overall inventory was at a low level. We think if want to improve the stalemate and wait-and-see mentality of downstream factories that "neither running after a big rise nor a drop", it is believed that the price of polymeric MDI will turn for the better future after ending the wide fluctuation range and stabilizing at a reasonable price level. However, this turning point is also approaching with the continuous move-back of recent prices.

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