Spot toluene di-isocyanate (TDI) prices in the Middle East are likely to come under further pressure, in line with softening values in the Asian market, because of weak demand and ample supply, industry sources said on Wednesday.
On 30 May, TDI prices were assessed at $2,600-2,700/tonne (€1,976-2,052/tonne) CFR (cost and freight) GCC (Gulf Cooperation Council), down by 11% from the high of $2,950-3,000/tonne CFR GCC hit in March, according to ICIS data.
Buyers are refraining from making fresh purchases on concerns that TDI prices may deteriorate further as downstream demand remains fragile, they said.
“We are buying strictly on a need-to basis now as there is not much reason to build up inventory levels,” a buyer said.
“Regional demand in the Middle East remains weak, while TDI availability is good,” he added.
Downstream TDI outlets such as the bedding and furniture sectors have been adversely affected by reduced consumer confidence and spending.
“Ongoing macroeconomic headwinds have translated to slower orders for consumer products. This means our requirements for TDI has also been curtailed,” said a GCC-based downstream foam producer.
TDI is mainly used in the manufacture of polyurethane (PU) flexible foams used in upholstery, mattresses and automotive seats.
Elsewhere in Asia, TDI demand has been weak since the first quarter because of the global economic slowdown.
Market players are becoming increasingly bearish about the near-term price trend as the key downstream foam manufacturing sector is entering its seasonal lull period till September. Spot TDI prices in Asia were last assessed at $2,460-2,600/tonne CFR China Main Port (CMP)/ Hong Kong on 29 May, compared with the March high of $2,700-2,750/tonne CFR CMP/Hong Kong, according to ICIS data.
A number of Middle East-based TDI producers, however, are keen to push for higher prices increases this month to recover margins.
“We don’t foresee prices falling further as suppliers are already selling at close to breakeven points. If prices are to fall further, it would not be economically viable to continue producing TDI,” said a producer.
Another TDI producer is targeting a price increase of around $50/tonne for June.
“We are hopeful that some end-users would be purchasing just before Ramadan in July,” the producer said.
However, any price increase will ultimately depend on improvement in demand, according to buyers.