Europe's TDI Sector: Navigating Price Oscillation Amid Moderate Demand-Supply Dynamics

At the beginning of March 2024, the Toluene Diisocyanate (TDI) prices witnessed a slight decrease of 0.4% in Germany amid improved availability of supplies in the regional market due to a reduction in offtakes because of moderate operation rates in the manufacturing units and cautious buying activities from the buyers.

As per the sources, in February 2024, the Eurozone's Manufacturing Purchasing Manager's Index declined marginally compared to the previous month and remained below 50, indicating a slowdown in manufacturing sector activities. The TDI demand was moderate to produce Polyurethane components in the Polyurethane segment as the construction sector saw a rise in outlook due to hopes of rate cuts and a decline in inflation by 2.6% during the past month. Similarly, the automotive industry witnessed a surge in demand for TDI amid the rise in the production of electric vehicles and an 8% increment in car sales in the region from last year. On the other hand, the orders for TDI remained sluggish from paint and coating manufacturers due to the decline in production and sales of coatings and paints. The decrease in production rates was due to the tight raw material supplies caused by the recent disruptions in the global supply chain. Similarly, the wood furniture sector also faced a decline in demand for PU foam and PU key component TDI owing to reduced production rates in the manufacturing sector.

However, during mid-March 2024, the TDI price trend oscillated as the regional suppliers raised their quotations by 0.8% in Germany amid affected production rates and supplies to the market. The cost support was moderate from the feedstock Toluene amid average demand and volatility in upstream Brent Crude Oil prices. The Brent Crude Oil prices surged due to the announcement of Crude Oil production cuts by OPEC+ and a decline in supplies in the international markets amid geopolitical tensions. Moreover, the European energy industry is at odds over energy security amid the US LNG export pause. It has also impacted the pricing of Toluene Diisocyanate.

Conclusively, according to ChemAnalyst data sources, Toluene Diisocyanate (T80) FD Hamburg prices witnessed USD 2570/MT at the end of the week, which concluded on 22nd March 2024.

As per the estimation, the TDI prices will increase as inadequate availability of supplies towards the end of the quarter would impact the supplier’s quotations. The production costs of TDI may escalate amid the limited availability of feedstock supplies and increase in feedstock Toluene costs. In the upcoming months, the demand for TDI may increase from the downstream Polyurethane segment amid the recent diversification in the apparel and footwear industry and rising demand for PU materials in the end-user fabrication industries.