TDI demand is sluggish, and the market is falling

In early October, the supply side of the TDI market was tight, and the price rose sharply to 26,000~26,500 yuan (ton price, the same below), but then the demand gradually slumped, the market peaked and fell, and the price fell back to 21,800~22,000 yuan
at the end of October.
In the future, although the supply side continues to be favorable, the sluggish demand continues to restrict the market, and TDI still has room
to decline.

The contradiction between supply and demand is amplified

According to Meng Xianxing, vice president of Shandong Chemical Research Institute, the TDI market continued its rally in September in early October, breaking through the monthly price high on October 17, up 35.
33% from the beginning of
the month.
The TDI price only maintained a half-month rally before retreating, and the price turned sharply downward
.

The sharp rise in TDI prices in early October is due to the continued tight supply side, resulting in a demand gap
in the market.
From the perspective of enterprise start-up, Shanghai Covestro stopped for about a week, involving a production capacity of 310,000 tons per year; Yantai Wanhua plant was routinely overhauled in October, involving a production capacity of 300,000 tons per year
.
At the same time, after the National Day, TDI logistics transportation in many places was restricted, and some devices were reduced
due to raw material logistics restrictions.
In addition, the strong atmosphere of traders going long also contributed to the market rally
.

The external market is also in an upward channel
.
In Europe, due to the long-term shutdown of many TDI devices and the lack of restart signals, the supply of goods is insufficient, and the local TDI price rises to 3500~4000 euros
.
Some regions implemented TDI bidding and procurement, and overseas TDI price spreads showed the largest range during the year
.
After the TDI price rose to a new high in the year, affected by the sluggish demand, the downstream peak season was obviously not strong, and it was more resistant to high-priced raw materials
.
Due to the continuous amplification of the contradiction between supply and demand, the bearish factor eventually dominates, causing the market to turn downward
.

It is expected that Yantai Wanhua TDI plant will resume production and restart in November, and the output may be significantly increased, which will further weaken the
market's momentum for longing.

Weak cost operation

As a TDI raw material, the market of toluene also showed a trend of first rising and then declining in October, but most of them showed a weak trend
.

Wang Quanping, chief engineer of Shandong Kenli Petrochemical Group, introduced that the accumulation of crude oil futures prices during the November holiday increased significantly, which gave a strong impetus to the price of chemicals, and the domestic market price rose rapidly after the holiday
.
However, after a brief surge in prices, due to the lack of effective support on the demand side, the market quickly returned to the downward channel
.
Coupled with the large number of TDI maintenance devices, the decline in toluene consumption, and the gradual weakening of terminal gasoline blending demand, the sales volume of domestic production enterprises is relatively high, and port inventories have risen, resulting in increased pressure on domestic supply and demand fundamentals, putting pressure
on prices.

Although the weak supply and demand side weakened the toluene market, the price of related mixed xylene products was relatively high due to tight spot resources in the port during the month, which gave some support
to the price of toluene.

Wang Quanping believes that the operating rate of the TDI industry is expected to increase, and the demand for gasoline blending is expected to be weak, but the current price difference between toluene and mixed xylene and mixed aromatics is large, which does not rule out the possibility of a decline in the supply of toluene due to the increase in gasoline self-use blending
.
For now, toluene consumption in November is expected to remain at a low end-of-year level
.
At the same time, after large-scale refining and chemical projects such as Shenghong Refining and Guangdong Refining were put into operation, due to the uncertainty of product output time, the overall negative release was released early, which put pressure
on the mentality of the industry.
On the whole, it is difficult for toluene to help TDI in terms of cost
.

Demand continues to be sluggish

From a downstream point of view, the polyether polyol market showed an inverted "V" operation
in October.
After the end of the November holiday, affected by unexpected fluctuations in the supply of propylene oxide in the upstream, a sharp rise in TDI, and the re-shutdown of the northern factory, the middle and lower reaches entered the market for replenishment
.
Although the import supply is small, and the north and south factories have no shipment pressure to maintain a strong market attitude, the market of polyether is becoming bleaker when the growth of TDI's downstream product sponge is blocked
.
Although the price of polyether continued to decline in mid-October and stimulated the phased replenishment, the price of polyether failed to form a rebound, dragging the market down
.

Not only that, epidemics have occurred in Henan, Hebei, Shandong, Guangdong, Fujian and other places, resulting in restrictions on the transportation and scheduling of some downstream products
.

In general, the apparent consumption of TDI in October shrank significantly compared with September, the overall domestic demand improved compared with the first half of the year, the import increase and decrease points coexisted, and the activity of the export side warmed up
.
However, given some demand for overdrafts before the September surge, apparent consumption contracted
in October.

From the perspective of the future market, the demand side is the most important limiting factor
in the operation of the market.
In the fourth quarter, the domestic waterproofing, runway and pipeline sectors weakened, the soft home and cold chain markets were general, and there were no obvious signs of volume of raw materials and terminal products, and the impact of the epidemic on downstream production scheduling was still there, and the transportation stock was expected
to weaken.
Although the supply has been reduced, it is still in a sufficient state, and the production schedule of some large polyether plants has decreased, and the import volume has decreased, which has limited
effect on the raw material TDI.