Robert Peacock aromatics consultant, ICIS outlined how the price reporting and consultancy company sees the supply side of the key raw materials, MDI and TDI developing in the coming years and how upstream price movements have influenced the price of isocyanates.
MDI will see overcapacity, but this will quickly be absorbed by a market that is growing at around 5%/year worldwide. TDI producers are likely to see their margins squeezed in the medium term, he warned.
Peacock illustrated his talk by referring to a global operating rate, which, as he explained “doesn’t refer to any specific plant or region.”
Taking MDI first, he said, “we expect a drop in operating rates over the next couple of years caused by the new capacity coming on stream in Saudi Arabia.
“However the good growth demand for MDI is expected to continue for the next few years. The extra capacity is expected to be taken up very quickly,” he said, adding that MDI producers should be “back up to average operating rates within a short time frame.”
Peacock said, “Around 2mT/year extra capacity is expected to come on stream by 2019.”
He added that “50% of this is in Asia, 25% in the Middle East. All of this is brand-new, integrated capacity. There are also plans for debottlenecking plants in the US and Europe.
Peacock said, ”We also expect there to be further rationalisation of existing and older units. This has already started in Asia with some of the older plants in…