SunSirs: TDI Market Imbalance Worsens; Prices Fluctuate at High Levels

Since the start of 2026, the global TDI (toluene diisocyanate) market has been characterized by tightening supply, a surge in exports and prices fluctuating at high levels. The combined effect of widespread plant shutdowns overseas and a recovery in demand has intensified the supply-demand imbalance across the industry chain, leading to significant price rises and widespread shortages, making it one of the most buoyant categories within the chemicals sector.

Export figures are impressive, showing substantial year-on-year growth

Customs data indicates that in the first quarter of 2026, China’s TDI  exports reached 154,700 tons, a 20.15% increase compared with the same period in 2025. Exports for the month of March alone surged to 58,200 tons, setting a new record high; Exports continued their strong growth momentum in April, with estimated volumes reaching 70,000–80,000 tons, representing a year-on-year increase of 80%–100%. Total TDI exports for 2025 stood at 550,000 tons, and annual growth is projected to remain at 20%–30% in 2026, with exports now serving as the core growth engine for the domestic TDI market. The surge in exports is primarily driven by supply shortages in the Middle East, Europe and Southeast Asia. The lifting of anti-dumping duties by India, coupled with underutilization of production facilities in Japan, South Korea and Europe, has further amplified reliance on Chinese supplies.

Capacity contraction since April has led to continued tightening of global supply

Since April, there has been a marked contraction in global TDI production capacity, with frequent plant maintenance and force majeure events exacerbating supply constraints. Kumho’s 200,000-tonne-per-year TDI plant in South Korea began maintenance in early April; originally scheduled to last one month, there is a possibility of extension due to raw material supply issues. In the Middle East, Saudi Arabia’s 200,000-tonne-per-year and Iran’s 40,000-tonne-per-year TDI plants remain shut down due to ongoing regional conflicts, with no prospect of a short-term restart. Although China is the world’s largest TDI producer, with a total capacity of approximately 2.06 million tons, some domestic plants temporarily reduced output in April, resulting in limited actual supply growth. Global TDI capacity expansion has stalled, with only a small amount of new capacity coming online in 2026. Future capacity additions will be highly concentrated in China, making it difficult to alleviate the short-term supply-demand imbalance.

Prices fluctuate at high levels, with the benchmark price remaining elevated

Since the start of 2026, TDI prices have followed a pattern of “initial rises followed by stabilization and minor fluctuations”, rising significantly overall compared to the end of 2025. At the beginning of the year, prices rose rapidly due to overseas supply disruptions, with an increase of around 25% in March; On 7 May, the Business Society TDI benchmark price stood at 17,333.33 RMB/ton. Although this represented a slight decline from early May, it remained within the historical high range. The core driver of price fluctuations is the supply-demand mismatch: overseas shortages have led to a surge in export orders, whilst domestic spot inventories remain persistently low. Traders are maintaining firm quotations, and essential procurement by downstream sectors is driving prices to remain at high levels with volatility.

Overseas supply landscape is being reshaped, with oligopoly intensifying

The global TDI supply landscape is characterized by a ‘rise in the East, decline in the West’ and ‘oligopolistic concentration’. Traditional European capacity continues to shrink; BASF’s 300,000-tonne-per-year plant in Germany has been permanently shut down, whilst Covestro’s 300,000-tonne-per-year plant has been halted due to a fire. Europe’s current effective capacity stands at just 250,000 tons per year, resulting in a significant regional supply shortfall. Capacity in Japan and South Korea has contracted substantially. Mitsui Chemicals in Japan has reduced output and undergone multiple shutdowns for maintenance, whilst South Korean plants operate at less than 70% capacity, resulting in a sharp decline in exports. In the Middle East, geopolitical factors have left production capacity in a state of near paralysis, further widening the global supply gap. Currently, global TDI production capacity is highly concentrated, with leading enterprises dominating the market; China accounts for nearly 60% of global capacity, making it the core of the global supply chain.

Upstream and downstream price linkages are putting pressure on polyurethane flexible foam costs

The primary upstream raw materials for TDI are toluene, nitric acid and liquid ammonia. Since 2026, high crude oil prices have driven up the cost of raw materials such as toluene, causing TDI production costs to rise continuously and providing strong support for product prices. In downstream applications, polyurethane flexible foam accounts for approximately 70% of the market and is widely used in furniture, mattresses, automotive interiors and other sectors. The high TDI prices have been passed on to the flexible foam sector, resulting in a significant increase in production costs for flexible foam manufacturers. Some small and medium-sized enterprises have been forced to cut production due to cost pressures, whilst downstream product prices have risen in tandem. The supply chain as a whole is exhibiting a price transmission pattern of ‘upstream price increases – TDI price increases – downstream price increases’. In other downstream sectors, such as coatings and adhesives, profit margins have also been continuously squeezed due to rising TDI prices.

Future Outlook: Supply-demand tightness persists; prices are more likely to rise than fall

Looking ahead, the tight supply-demand balance in the global TDI market is unlikely to improve in the short term. Prices are expected to remain at elevated levels with some volatility, and further increases cannot be ruled out.

Looking ahead, the tight supply-demand balance in the global TDI market is unlikely to improve in the short term; prices are expected to remain at elevated levels with volatility, and further upward movement cannot be ruled out. On the supply side, the timeline for the resumption of overseas production facilities remains uncertain, with risks such as geopolitical tensions and plant maintenance still present. The rollout of new domestic capacity is proceeding slowly, resulting in limited short-term supply growth. On the demand side, the export market continues to perform strongly, with persistent supply gaps in regions such as Southeast Asia, the Middle East and India; domestically, demand from downstream sectors such as furniture and automotive is gradually recovering, providing solid support for essential TDI demand. On the cost side, upstream raw material prices remain at elevated levels. Coupled with strong willingness among enterprises to maintain prices amid the industry’s robust performance, TDI prices are more likely to rise than fall. In the medium to long term, as new Chinese production capacity is gradually brought online, supply-demand tensions may ease somewhat; however, the TDI market is expected to remain in a state of tight supply throughout 2026, with prices at high levels becoming the norm.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.