Asian methyl di-p-phenylene isocyanate (MDI) producers are targeting higher October prices, with spot material likely to be limited by heavy turnaround schedule at regional plants, industry sources said on Friday.
Power restrictions in select China provinces were also hampering MDI production, while downstream demand was strong, they said.
For polymeric MDI (PMDI), a number of producers were targeting an increase of $70-100/tonne (?5-79/tonne) for October material to $1,900-1,950/tonne CFR (cost and freight) China, and $2,100-2,150/tonne CFR China for monomeric MDI (MMDI) from September, market sources said.
PMDI parcels for September exchanged hands at $1,830-1,850/tonne while MMDI cargoes were sold at $1,980-2,050/tonne, according to ICIS. Most of the September cargoes had been sold out, market sources said.
PMDI is the raw material for making polyurethane insulation foam used in refrigerators, while MMD is used in the adhesive, shoe sole sectors and in industrial, automotive and textile applications.
Selling ideas for October had risen on expectations of continued tight supply for the rest of 2010 as nearly half of MDI facilities in Asia would go off line in the next few months, market sources said. (Please see table below)
Yantai Wanhua Polyurethanes may have to delay the start-up of its 300,000 tonne/year unit in Ningbo as it has yet to receive regulatory approvals from the provincial government amid the ongoing power restrictions in selected Chinese provinces, market sources said.
Output from the new unit would have helped to meet the increased MDI demand, market sources said, adding that the delay in commencing operations had exacerbated the tight supply situation.
Yantai was now supplying most of its material directly to downstream industries which had reduced MDI availability for distributors and traders in September, said a buyer based in eastern China.
Buyers acknowledge that their inventories are low and they have to buy. Sentiment is definitely better from end August compared with the past few months, a Japanese trader said.
PMDI demand has been firm in China due to its home appliance subsidy introduced in 2009 to stimulate local buying of refrigerators, among other appliances, local MDI distributors said.
Downstream key refrigerator sector demand has been stable after a slight dip after the peak season ended in June. And as summer started, [demand from the] construction segment has improved steadily, said a source at major producer.
Refrigerator sales had hit a new peak in July, compared with other home appliances, according to China s Ministry of Industry and Information Technology (MIIT).
Major refrigerator manufacturers, including Midea, Haier, Hisense, Henan Xinfei Electric and Hefei Meiling, notched up sales of around yuan (CNY) 6.73bn ($990m) in July, up 42% year on year, MIIT said.
Improving demand from the downstream adhesive and shoe sole sectors had helped MMDI producers to hike their selling ideas, market sources said.
Demand for other downstream products like thermoplastic polyurethane (TPU) and spandex had also remained stable despite operation cuts at plants in Shanghai, Jiangsu and Zhejiang regions due to the power restrictions, producers said.
Looking at the rosy demand, we can achieve higher prices in the forward month, said a northeast Asian producer.
Our profits have been really low or even negative for the past three months. All makers will agree that [we must earn] a reasonable profit to run our MDI units well, said another northeast Asian manufacturer.
While strong demand had helped MDI prices inch upward in China, demand in other Asian countries, particularly India and southeast Asia, had not reached expected levels, said a global producer.
Prices in India inched up slightly in tandem with the stronger China market and were discussed at $1,800-1,850/tonne CIF (cost, insurance and freight) on 8 September, with more deals reported at the higher end, according to ICIS.
Trading activity in southeast Asia had slowed down during the holy month of Ramadan, with demand expected to pick up only after Eid, regional players said.
Power restrictions in select China provinces were also hampering MDI production, while downstream demand was strong, they said.
For polymeric MDI (PMDI), a number of producers were targeting an increase of $70-100/tonne (?5-79/tonne) for October material to $1,900-1,950/tonne CFR (cost and freight) China, and $2,100-2,150/tonne CFR China for monomeric MDI (MMDI) from September, market sources said.
PMDI parcels for September exchanged hands at $1,830-1,850/tonne while MMDI cargoes were sold at $1,980-2,050/tonne, according to ICIS. Most of the September cargoes had been sold out, market sources said.
PMDI is the raw material for making polyurethane insulation foam used in refrigerators, while MMD is used in the adhesive, shoe sole sectors and in industrial, automotive and textile applications.
Selling ideas for October had risen on expectations of continued tight supply for the rest of 2010 as nearly half of MDI facilities in Asia would go off line in the next few months, market sources said. (Please see table below)
Yantai Wanhua Polyurethanes may have to delay the start-up of its 300,000 tonne/year unit in Ningbo as it has yet to receive regulatory approvals from the provincial government amid the ongoing power restrictions in selected Chinese provinces, market sources said.
Output from the new unit would have helped to meet the increased MDI demand, market sources said, adding that the delay in commencing operations had exacerbated the tight supply situation.
Yantai was now supplying most of its material directly to downstream industries which had reduced MDI availability for distributors and traders in September, said a buyer based in eastern China.
Buyers acknowledge that their inventories are low and they have to buy. Sentiment is definitely better from end August compared with the past few months, a Japanese trader said.
PMDI demand has been firm in China due to its home appliance subsidy introduced in 2009 to stimulate local buying of refrigerators, among other appliances, local MDI distributors said.
Downstream key refrigerator sector demand has been stable after a slight dip after the peak season ended in June. And as summer started, [demand from the] construction segment has improved steadily, said a source at major producer.
Refrigerator sales had hit a new peak in July, compared with other home appliances, according to China s Ministry of Industry and Information Technology (MIIT).
Major refrigerator manufacturers, including Midea, Haier, Hisense, Henan Xinfei Electric and Hefei Meiling, notched up sales of around yuan (CNY) 6.73bn ($990m) in July, up 42% year on year, MIIT said.
Improving demand from the downstream adhesive and shoe sole sectors had helped MMDI producers to hike their selling ideas, market sources said.
Demand for other downstream products like thermoplastic polyurethane (TPU) and spandex had also remained stable despite operation cuts at plants in Shanghai, Jiangsu and Zhejiang regions due to the power restrictions, producers said.
Looking at the rosy demand, we can achieve higher prices in the forward month, said a northeast Asian producer.
Our profits have been really low or even negative for the past three months. All makers will agree that [we must earn] a reasonable profit to run our MDI units well, said another northeast Asian manufacturer.
While strong demand had helped MDI prices inch upward in China, demand in other Asian countries, particularly India and southeast Asia, had not reached expected levels, said a global producer.
Prices in India inched up slightly in tandem with the stronger China market and were discussed at $1,800-1,850/tonne CIF (cost, insurance and freight) on 8 September, with more deals reported at the higher end, according to ICIS.
Trading activity in southeast Asia had slowed down during the holy month of Ramadan, with demand expected to pick up only after Eid, regional players said.
