In October, domestic polymeric MDI and pure MDI market prices were adjusted backwards, that is, the price of aggregated MDI was adjusted downwards, and the price of pure MDI was adjusted upwards.
Aggregate MDI – Callback Down
In the week before the National Day holiday in October, the price of the domestic polymeric MDI market ushered in a wave of strong surge. From about 21,000 yuan/ton on September 25 to more than 24,000 yuan/ton on September 30. Before that, that is, from the beginning of September to September 25, the market price fluctuated within a narrow range of 20,000-21,000 yuan/ton. The main reason why it suddenly broke the price range that has fluctuated for more than half a month is:
1) Demand side: From the perspective of domestic short-term demand, industry players have expectations for the stocking market of domestic downstream manufacturers during the National Day holiday. In terms of export demand, the domestic MDI export volume data was released in August, a year-on-year increase of 33%. In view of the fact that the force majeure of some overseas MDI devices has not yet been lifted, and several sets of MDI devices in Europe and Asia have been under maintenance in October, the market expects that the export volume of domestic MDI manufacturers will still maintain a strong growth trend in September, which is conducive to the release of inventory in that month.
2) Supply side: Near the end of the month, major agents have basically completed shipments. Some Asian manufacturers will stop for maintenance in October. The market expects suppliers to maintain stable but tight supply in October.
3) Raw materials: In September, the prices of various domestic raw materials have generally risen, involving MDI upstream raw materials such as pure benzene and liquid chlorine, PU hard foam small materials such as phosphorus-containing flame retardant TCPP, etc.
However, the National Day holiday returned to the market, and the domestic aggregated MDI started a high-level unilateral correction. As of October 29, the domestic polymeric MDI market price was 20,500-21,000 yuan/ton, which has almost fallen back to the level before the above-mentioned “National Day small holiday upward rush market”. Since mid-September, the strict implementation of dual energy consumption control and power restriction and production restriction policies in many places in China has caused domestic MDI downstream manufacturers to reduce production. The high price of raw materials and the shortage of some raw materials have brought negative impacts on the purchasing demand of downstream manufacturers and the stability of production plans.
In October, although individual MDI manufacturers controlled distribution, other manufacturers maintained normal shipments, and the overall supply was stable. In order to catch the tail of the “Silver Ten”, most of the trade ports actively shipped goods, and the negotiated prices showed a continuous weak downward trend. The weekly guidance price of Shanghai manufacturers follows the market, and has been lowered week after week. The price in the middle and late ten days of the northern big factory is 23,800 yuan/ton, but the support for price stabilization is weak. Some traders’ panic and willingness to ship have increased. Towards the end of the month, as domestic mainstream manufacturers announced their new listing prices one after another, they remained flat or slightly lowered month-on-month, and the market was weak.
Pure MDI – head up
Driven by factors similar to the price hike of the above-mentioned aggregated MDI, and the “leading” of the price rise of the aggregated MDI market, the domestic pure MDI offer slightly increased to 22,000-23,000 yuan/ton in the last two days of September. In October, the offer of pure MDI rose slowly and steadily. As of October 29, the market offer price of pure MDI was 23,500-24,000 yuan/ton, and the offer price rose by 5.6% in the current month.
However, compared with the downstream industry of aggregated MDI, the production and operation of pure MDI downstream manufacturers have been more affected by external disturbance factors in recent months. Factor 1) The epidemic in Fujian Province in September caused many local shoe factories to temporarily suspend production, and workers were quarantined at home. Factor 2) Between September and October, the prices of various raw materials rose strongly. For example, BDO rose from 27,400 yuan/ton in early September to 30,800 yuan/ton on October 29, an increase of 12.4%. Adipic acid AA rose from 10,200 yuan/ton in early September to 12,800 yuan/ton on October 29, an increase of 25%. Factor 3) The curtailment of electricity and production from mid-September has affected the operating rates of downstream manufacturers in Jiangsu, Zhejiang and southern regions. Affected by this, the downstream manufacturers of pure MDI, such as shoe sole liquid and slurry factories, have operated at a low operating rate of 4-5%, and TPU and spandex factories have also reduced their load and production to varying degrees, further suppressing the demand for raw materials such as pure MDI.
On the positive side, the export volume of domestic pure MDI returned to double-digit growth in September, with a month-on-month increase of 38.5% and a year-on-year increase of 27%. The number of exports to countries such as India and Vietnam increased significantly that month, and the increase in exports from August reached more than 9,000 tons. This is related to the gradual recovery of local production activities from the epidemic. In addition, the volume of exports to Brazil, Turkey and the United States also increased significantly from the previous month.
At the end of October, the leading domestic manufacturers such as Wanhua, BASF and Huntsman issued a guide price for pure MDI listing in November, which remained stable at a high level from the previous month. Yesterday (November 1), manufacturers in Shanghai raised the latest guide price to 24,200 yuan/ton. On the whole, it reflects the manufacturers’ expectations for the stable and positive market of pure MDI this month. For pure MDI, the market has been suppressed by multiple negative factors. Next, if the global epidemic prevention and control further improves, and economic, production and consumption activities further recover, it will benefit the recovery and development of pure MDI and its downstream industries.
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