Views: 2 Author: Site Editor Publish Time: 2019-09-16 Origin: Site
Source: China National Chemical News September 16, 2019
According to the monthly market report of global polyurethane raw materials released by IHS Markit, US diphenylmethane diisocyanate (MDI) producers have been seeking price increases of 7-10 cents/lb for several months, but they only increased prices in July After a few cents, no price increase was achieved in the remaining months. David Porter, executive director of IHS Markit's polyurethane raw materials business in the Americas, said: \"In August, the situation is no different. Most polymer grade MDI (pMDI) market prices continue to maintain July levels. The price of monomer grade MDI may rise Sex is slightly larger.
Manufacturers' bargaining power weakened
IHS Markit said that sufficient supply and weak demand are the main reasons why buyers do not accept price increases. Compared with previous years, this year's planned or unplanned production shutdown caused a significant reduction in capacity losses. Trade data shows that imports are also declining. However, the reduction in imports did not cause the market supply to be tight enough, so the seller could not obtain a more favorable bargaining position. In addition, the seller is working hard to ensure sales, and is willing to sacrifice the profit margin of sales to ensure market share, so buyers have sufficient reasons to resist price increases. \"
In addition, market demand is shrinking, especially in August when the seasonal demand slows down. IHS Markit said: The purchase demand of the insulation industry is also weakening. Demand from spraying foam materials is also marginal. In terms of thermal insulation materials, due to falling prices of competitive products such as rock wool and expandable polystyrene (EPS), more substitutes will enter the market and pose a threat.
IHS Markit pointed out that from June to July, the U.S. housing construction rate fell by 4%, and for the third consecutive month. However, at the same time, housing permits have increased by 8%. IHS Markit expects that MDI producers will continue to push up prices in September, especially if the raw material price of pure benzene rises as expected due to tight supply. The tight supply due to the expected shutdown in October may also give sellers sufficient reasons to raise prices.
IHS Markit analyst Porter explained that buyers usually return to the market in September and October, but concerns about the regional and global recession may dampen people's buying enthusiasm. Unless supply is tight due to unexpected events, producers cannot achieve price increases.
Trade war exacerbates price volatility
Over the past few years, MDI pricing has been fluctuating globally. In 2017, many factories stopped production and production capacity was tight, causing MDI prices to soar. At the end of 2018, product substitution and improved supply led to weakened demand, which in turn caused MDI prices to collapse. Now the MDI market must consider the factors of the Sino-US trade war. In September 2018, the United States imposed a 10% tariff on pMDI commodities originating in China. In May 2019, the tariff rate was raised to 25%.
James Elliott, chief analyst of polyurethane raw materials at IHS Markit, said: \"The introduction of a 25% tariff will keep the volatility in the pMDI market, especially in the US market.
The United States has historically been a net exporter of pMDI, but its domestic demand has grown faster than capacity growth. In 2018, the United States became a net importer of pMDI. In that year, pMDI exported 200,000 tons and imported 300,000 tons, with a net gap of 100,000 tons. In 2018, about 71% of the imported pMDI of the United States came from China, and the import value was slightly less than 500 million US dollars.
The demand for pMDI in the United States remains unchanged this year, but imports have been reduced by half, from 171,000 tons in the first half of 2018 to 81,000 tons in the first half of 2019. James Elliott pointed out that the main reason for the simultaneous decline in imports was that imports from China fell by nearly 50%. In addition, due to the strong market performance in the first quarter, China tightened its export supply, but the main reason is that the US imposed additional tariffs.
The US pMDI trade position will be rebalanced. James Elliott pointed out that US domestic supply can be used to offset the reduction in Chinese supply, and major end users in the construction, electrical and wood composite industries will not have to tighten consumption, although they may face higher material costs.
Other polyurethane raw materials are also affected by the Sino-US trade war. The United States imposes a 25% tariff on toluene diisocyanate (TDI) and propylene oxide (PO) products, while China imposes a 25% retaliatory tariff on pMDI, monomer-grade MDI and TDI originating in the United States, and 10% on PO Tariffs.