June 2024: The Impact of Bearish PU Segment Reflects on the US TDI Prices

In the North American region, the Toluene Diisocyanate (TDI) price trend showed bearish movement as producers reduced their TDI quotations by around 2% during the first half of June 2024, driven by subdued demand and increased inventory levels. Supply was sufficient to meet demand from the Polyurethane segment.

The TDI market saw steady availability of stocks despite reduced demand from buyers and unchanged operating rates at production facilities. In May, the Manufacturing Index increased, and data indicated a modest strengthening in the manufacturing sector's health. The TDI manufacturing rates were steady amid the firm availability of feedstock Toluene supplies and a 2.8% decrease in prices during the week attributed to a decline in cost support from upstream Crude Oil towards the end of last month stemming from decreased consumption in downstream applications and heating purposes and an increase in onshore inventories. It eased the production costs of TDI. At the same time, the TDI inventory levels were improved in the domestic market due to reduced supplies to importers during May 2024.

Meanwhile, the demand for TDI was sluggish from the Polyurethane segment due to reduced orders from the construction sector. According to data from the US Census Bureau, construction spending in April 2024 was estimated at an annual rate of USD 2,099.0 billion. It showcased a slight decrease of 0.1% from the revised March estimate of USD 2,101.5 billion, with further declines anticipated in May. Annual private construction spending amounted to USD 1,611.9 billion, down 0.1% from the revised March estimate of USD 1,613.3 billion, with expectations of continued decline in May due to higher borrowing costs. Non-residential construction reached an annual rate of USD 721.5 billion in April, marking a 0.3% decrease from the revised March estimate of USD 723.8 billion. However, expectations for improvement in May 2024 are due to rising house completion permits and lower mortgage rates. Additionally, during May 2024, the US Federal Reserve maintained interest rates unchanged within a range of 5.25% to 5.50% as part of efforts to curb inflation. The Fed released updated projections indicating one 0.25% rate cut in 2024 and four cuts in 2025, although four committee members anticipate no cuts this year.

According to the ChemAnalyst data sources, the TDI (T80) FOB Texas quotations in the US witnessed USD 2890/MT.

As per the estimation, the TDI prices are expected to decline in the North American region in the upcoming weeks towards the end of the first half of 2024 because of the anticipated decline in demand from the Polyurethane segment. The buyers might decrease the TDI offtakes from the market, which will improve the inventory levels in the regional market.