Pure MDI: Seeking support for a strong rise?

In the first half of May, the domestic pure MDI market showed a trend of “rising first and then stabilizing”.
At the end of April, mainstream manufacturers raised their listing prices in May one after another; some manufacturers tightened their barrel supply. Affected by this, on May 6th after returning to the market during the May Day holiday, the domestic pure MDI market offer was raised to 18,800-19,000 yuan/ton (domestic products), and 19,300-19,500 yuan/ton (imported goods). The offer of imported goods is relatively high, mainly due to the lack of imported goods entering the market recently, and the high cost of imports, so the holders are reluctant to sell at low prices.
Last week, the mid-term guide price of a Shanghai factory and the buyout price of a factory in the north each increased. The pure MDI market continued to be strong.
At the beginning of this week, the pure MDI market offers were relatively strong, and the range remained stable. At noon yesterday, the price of northern factories was raised to 21,000 yuan/ton, and the supply of barreled products was tight; Korean manufacturers of MDI products completed their sales tasks ahead of schedule and did not accept orders in May. As of May 17, the mainstream quotation of pure MDI in East China was 19,200-19,500 yuan/ton, an increase of 700-900 yuan/ton compared with the end of last month. It is expected that the short-term pure MDI market will have good support and a pattern of strong shocks.

Comparatively speaking, the demand-side support of pure MDI has been relatively weak recently.
The main factory equipment of shoe sole raw liquid is running smoothly, and some small and medium-sized manufacturers have slightly increased their load. Production and delivery are mainly based on contract orders, and the increase in raw material consumption is limited; pulp manufacturers are affected by the decrease in orders from downstream manufacturers of their terminals, and the pressure of competitive shipments still exists; spandex Manufacturers’ demand is stable and weak. On the whole, the demand follow-up of the main downstream industries of pure MDI is relatively mild.

Textile and garment is one of the main terminal downstream industries of pure MDI. Some recent statistics on textile and garment are quite eye-catching.
On May 9, the China Chamber of Commerce for Import and Export of Textiles disclosed that in April 2023, China’s textile and apparel exports reached 256.6% in US dollars, driven by China’s continued efforts to stabilize foreign trade policies and the recovery of supply chains, accelerated delivery of orders, and a lower base. billion U.S. dollars, an increase of 9%, and a decrease of 2.8% month-on-month. The overall decline in textile and apparel exports narrowed further. At the same time, the structure of China’s textile and clothing export market has changed. With the continuous release of RCEP policy dividends, China’s textile industry has not only increased its export scale to Vietnam and other ASEAN countries, but also exported textile and clothing products to other RCEP member countries such as South Korea and Australia. The amount has also further expanded by 10% to 15% year-on-year.

In terms of textile and clothing transactions, according to the “Analysis of the First Quarter Textile and Clothing Professional Market Operation” released by the China Textile Federation Circulation Branch, from January to March 2023, the total turnover of 44 textile and clothing professional markets that the Circulation Branch will focus on monitoring It reached 369.862 billion yuan, a year-on-year increase of 22.8%. The restriction of the epidemic on the physical business has basically dissipated, and the textile and clothing circulation field has shown a recovery.

It can be seen from some of the above statistical data that in recent months, the consumption demand and prosperity of the terminal textile and clothing have taken the lead in recovering. However, it will take time to improve the demand for raw materials such as pulp and spandex.
Therefore, in addition to the price adjustment of pure MDI manufacturers to stabilize the market, the downstream demand for pure MDI is expected to recover, which is also the support point for promoting the recent steady upward market of pure MDI.