Global Toluene Diisocyanate Market Faces Bearish Trend Amidst Sufficient Supplies

The Toluene Diisocyanate market showcased a bearish movement in the global markets during June 2023. The reason is that the supplies are excessively available in the international markets, and purchasing activities are inadequate.

In Europe, the suppliers reduced their quotations amid an increase in inventory levels due to moderate offtakes from Polyurethane producers and sufficient availability of supplies. From the past few months, Toluene Diisocyanate consumption rates were already depressing from the downstream Polyurethane industries. Simultaneously, the offtakes of Polyurethane coating and sealants were stable in the construction sector.

Meanwhile, the hike in bank interest rates during June 2023 made the buyers cautious. Purchasers avoided any unnecessary trading activities. Furthermore, the material was already available in the market, and procurement activities were limited. Consequently, Europe's manufacturing Purchasing Manager's index dropped again and remained below 50 during June 2023, indicating further contraction in manufacturing activities.

The drop in supplier quotations of Toluene Diisocyanate was noticeable at the end of the month after the strengthening of the Euro due to a hike in interest rates by the European Central Bank and the decrease in logistics costs.

Similarly, buying activities were inadequate in the USA due to weak manufacturing activities in the Polyurethane segment. However, in the Asian region, the demand was stable from importers, and Chinese manufacturers increased their quotations before the Dragon Boat Festival as China is a key producer of Toluene Diisocyanate, and the market was closed during the festival.

Production costs of Toluene Diisocyanate were reduced due to a decrease in feedstock Toluene costs and increased inventory levels. This was coupled with previous falls in upstream Styrene prices, dampened demand from downstream industries, and volatile Crude Oil prices. Consequently, the upstream cost pressure eased, and production costs remained moderately low during the month.

According to the ChemAnalyst data sources, the prices of Toluene Diisocyanate decreased by almost 2% in the European region. Similarly, in the United States, the prices of Toluene Diisocyanate fell by 5% during June 2023. At the end of the first half of 2023, the Toluene Diisocyanate (T80) FD Hamburg prices witnessed USD 3972/MT, and Toluene Diisocyanate (T80) FOB Texas prices at USD 3078/MT.

As per the estimation, the surplus availability of Toluene Diisocyanate components in the market will further suppress the demand from Polyurethane producers. The decrease in upstream Crude Oil prices will further reduce production costs. However, the concerns regarding the recession in the market will impact procurement activities. In the US, the anticipated increase in Automotive manufacturing in August may raise the Polyurethane foam and its key component Toluene Diisocyanate orders in the market.