SunSirs: Driven by Positive Factors on the Supply Side, the Price of MDI Gradually Rose

Price trend:

According to SunSirs' commodity market analysis system, from December 1st to 19th, the domestic MDI market price rose in a stepwise manner. The average price at the beginning of the month was 14,533 RMB/ton, and the average price on December 19th was 14,933 RMB/ton, representing a 2.75% increase during the period and a 17.87% year-on-year decrease. Entering December, the MDI market saw a continuous stream of news regarding supply, including frequent maintenance shutdowns and price adjustments both domestically and internationally. This strong news support boosted market confidence. Major domestic manufacturers underwent concentrated maintenance, slowing down the replenishment of supplies. Intermediaries operated cautiously, and the favorable supply situation supported the price increase of MDI.

Market Analysis

Supply side: Wanhua Ningbo began maintenance on November 15th, expected to last approximately 55 days; BASF Chongqing plant began maintenance on December 13th, expected to last about 30 days; Covestro Shanghai plant gradually shut down starting December 11th, for approximately 30 days; Huntsman's 280,000 tons/year MDI plant in the Netherlands experienced an unexpected shutdown in late November, expected to last until mid-December, with remaining production lines operating at low capacity.

Cost side: The market price of raw material benzene continued to fluctuate at a low level. Benzene supply decreased recently, but a large volume of shipments arrived from the end of November to the beginning of December, leading to a continuous increase in port inventories. From the demand side, the operating rates of downstream benzene industries had decreased to varying degrees recently. In the short term, the overall supply and demand for benzene are weak, coupled with weak support from crude oil prices, resulting in benzene maintaining a weak trend. The price of aniline, another raw material, fluctuated and declined, influenced by supply-side factors, with prices initially falling before rising, but showing an overall downward trend.

Demand side: Downstream buyers were entering the market on an as-needed basis, showing increased resistance to high-priced goods, making it difficult for transactions to increase significantly.

Market Outlook

As of December 19, the transaction prices in the MDI market had softened slightly, and demand was relatively weak. Manufacturers had a strong intention to maintain prices, but this was hampered by weak demand, increasing the resistance to price increases. It is expected that the MDI market will consolidate in the short term. Close attention should be paid to future market supply and demand dynamics and relevant news.

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