MDI Market Overview and Outlook Industry Overview - The global MDI market is currently experiencing a supply-demand imbalance, primarily due to new capacities from China and South Korea, coupled with the impact of US-China tariffs, which limit price increase momentum. The domestic market has entered a low season, and short-term prices are expected to remain stable [1][2] - Global MDI demand growth is lower than expected but still positive. Recent domestic prices for polymer MDI are around 14,500-14,600 RMB/ton, while pure MDI has decreased to approximately 19,500 RMB/ton [1][2] Key Points and Arguments - **Price Dynamics**: The MDI industry has seen significant changes in 2025, with slow recovery in domestic and overseas demand. The expected global demand growth was initially set at 3-4%, with domestic expectations at 5-6%, but actual growth has fallen short [2][5] - **Regional Price Comparison**: Recent price adjustments in Asia were lower than anticipated, with a recent increase of $100 instead of the expected $200. Current prices in Europe and domestically are close, while the US market remains stable due to anti-dumping policies and stable demand [2][3] - **Production Rates**: Domestic MDI operating rates have dropped to around 70%, with planned maintenance by companies like Wanhua Ningbo and BASF Chongqing having limited supply impact. European operating rates are also around 70%, while US production has returned to normal levels [4][6] - **Demand Drivers**: Domestic demand for MDI is positively influenced by growth in refrigerator and freezer production, automotive production, and cold storage capacity. The demand for formaldehyde-free board materials is increasing, and wind turbine blade demand is also growing [5][7] Additional Important Insights - **Inventory Levels**: MDI inventory is distributed among factories, traders, and end customers. Factory inventories are normal, while traders are keen to stock up, and downstream customers are maintaining low inventory levels due to seasonal price fluctuations [11] - **Future Demand Outlook**: The outlook for 2026 is optimistic, with reduced tariff impacts and recovery in the refrigerator and freezer supply chain. The automotive sector is expected to maintain high growth, although slightly lower than in 2025. Exports may rebound, particularly from Europe, Africa, and India, compensating for weakness in the US market [9][10] - **Cost Structures**: Domestic production costs vary, with Wanhua using a coal chemical route at a lower cost compared to others using natural gas. European production costs are higher due to stable natural gas prices, while US production costs remain the lowest globally [13][15] Conclusion - The MDI market is navigating through a complex landscape of supply-demand dynamics, pricing pressures, and regional variations. The outlook for 2026 appears positive, with several growth drivers in place, although challenges remain in the form of geopolitical tensions and market fluctuations.