Sellers push for MDI hike in response to demand

Europe’s methylene di-p-phenylene isocyanate (MDI) sellers continue to push for higher prices in September and into October. They claim healthy demand in a very tight market should support attempts to push up prices. Polymeric MDI prices are currently quoted at €1700-1900/tonne.

Producers are pursuing increases of up to €200/tonne for September. Bayer confirms it wants to raise MDI prices by €200/tonne from 1 September in response to high feedstock and energy costs and healthy demand.

Certain other sellers claim to have achieved their September price target. They note that customers are desperate to secure material, which has tempered resistance to higher prices. Some MDI producers suggest that price increases of over €100/tonne will be sought and obtained for October.

European MDI output has been hit by production problems. Bayer’s 140 000 tonne/year unit at Brunsbuttel, Germany, ran at 75% of capacity from early July, due to technical problems, until mid-August, when it entered scheduled maintenance. It has recently restarted and commercial grade material is expected in the market presently.

Global MDI demand has increased by up to 15% in the first half of 2004 and Bayer is forecasting that MDI will grow at around 6%/year to 2008. The company says it has increased global production by 10% compared with last year.

Strong global demand, particularly from Asia, has provided a bulwark for price hikes. Asian polymeric MDI prices are reported at $2250-2350/tonne CFR China, marking an increase of $100-200/tonne on August.

Asian markets are increasingly the driving force in the global polyurethane market. According to consultancy IAL, production of polyurethane products in China, Hong Kong, South Korea, Japan and Taiwan reached 3.2m tonne in 2003, with flexible foams and coatings accounting for over half of all output.

China already dominates the Asian market and demand is expected to rise through Q4 as purchases from the construction industry and insulation sector rise.