2025-07-19 14:02Summary of TDI Market Analysis and Future Price Outlook Industry Overview - The TDI (Toluene Diisocyanate) market is currently facing significant disruptions due to a fire at Covestro's plant in Germany, which has reduced global effective capacity by approximately 35% [1][2][48]. - The incident is expected to exacerbate supply shortages, particularly in the European market, potentially leading to a global TDI supply gap of 400,000 to 500,000 tons by Q3 2025 [1][10]. Key Points and Arguments Supply and Demand Dynamics - Covestro's fire has directly impacted the supply of 300,000 tons of TDI, contributing to a global effective capacity reduction of about 1.1 million tons [2][48]. - Domestic TDI prices in China have surged from 12,000 CNY/ton to 14,200 CNY/ton, with expectations to exceed 15,000 CNY/ton soon [1][2][49]. - European spot prices have reached approximately 2,500 EUR, equivalent to about 19,500 CNY, reflecting an increase of over 30% [2][49]. Price Projections - TDI prices in East China are projected to range between 16,000 to 17,000 CNY/ton next month, stabilizing around 15,000 CNY/ton in Q4 [1][6][49]. - The gross margin for the TDI market is expected to exceed 40%-45% this month, reaching 55%-60% in Q3, and stabilizing around 50% in Q4 [7][8]. Impact on Downstream Industries - The polyurethane industry is significantly affected, with downstream clients maintaining only 7 to 10 days of inventory, leading to production cuts of 30% to 40% for small to medium enterprises [4][50]. - Production costs in the automotive and home appliance sectors are anticipated to rise by 10% to 15% due to increased TDI prices [4][50]. Recovery Timeline for Covestro - Covestro expects to restore 50% of its capacity by the end of August and achieve full production by September, although risks related to chlorine pipeline corrosion and environmental inspections may delay recovery [5][51][52]. Export Opportunities - With European prices significantly higher, domestic companies like Wanhua Chemical and Cangzhou Dahua are expected to increase their export share, with projections indicating that exports could rise from 25% to 40%-45% by 2025 [8][12]. Additional Important Insights Market Challenges - The TDI market is currently facing a triple crisis: supply, price, and inventory [10][11]. - Social and enterprise inventories are at historical lows, with large enterprises having a turnover of 10 to 15 days and some small manufacturers facing zero inventory [11]. Future Capacity and Demand Forecast - By 2025, global TDI capacity is expected to reach 3.6 million tons, with China accounting for 1.63 million tons [12][21]. - Demand growth is projected to slow to 3%, with significant contributions from the automotive and construction sectors [21][41]. Regional Demand Insights - In 2025, Europe is expected to account for 20% of TDI demand, approximately 700,000 tons, while China will represent 40%, around 140,000 to 145,000 tons, driven by supportive policies [13][21]. Environmental and Regulatory Considerations - Environmental pressures are prompting companies to develop low VOC products, which may enhance market competitiveness for firms like Wanhua [23][24]. - The potential for anti-dumping measures from Europe could arise if China's market share exceeds 40% [39]. Conclusion - The TDI market is currently in a state of flux due to supply disruptions and rising prices, with significant implications for downstream industries and export opportunities. The recovery of Covestro's production capacity will be critical in stabilizing the market, while ongoing environmental regulations and potential trade barriers will shape the future landscape of the TDI industry.