USES

Toluene di-isocyanate (TDI) is used in flexible polyurethane (PU) foam, which has outlets in upholstery, mattresses and automotive seats. Other uses include rigid foams and adhesives, paints, concrete sealers and as a crosslinking agent for nylon 6 and intermediates in PU coatings and elastomers.

SUPPLY/DEMAND

TDI supply has been tight across the globe throughout the past 12 months. BASF’s 300,000 tonne/year plant in Ludwigshafen, Germany has either been shut down or running at reduced rates since November 2016. The main reactor at the plant had to be replaced and the company has been running the plant at reduced rates with a smaller reactor for some time.

In addition, Sadara’s new 200,000 tonne/ year TDI plant in Saudi Arabia started up in August 2017 after an extended delay. Sources said that commercial production from the new plant has yet to be achieved. Supply tightness worsened following the landfall of Hurricane Harvey in the US Gulf Coast, which lead to Covestro declaring force majeure on TDI supplies from its 220,000 tonne/year plant in Baytown, Texas.

PRICES

Driven by persistent supply tightness, North American TDI prices have increased significantly over the past 12 months. ICIS has raised its TDI assessments by a cumulative 53 cents/lb ($1,168/tonne) since the beginning of 2017 and prices are up by a total of 75 cents/lb since November 2016.

Suppliers have nominated a series of price increases throughout 2017, most of which have seen full or at least partial implementation as supply limitations have left buyers with little room to negotiate, especially given healthy demand for downstream polyurethane systems.

Buyers complain that persistently rising raw material costs have compressed converter margins. Some buyers able to do so have experimented with substituting methyl di-p phenylene isocyanate (MDI) for TDI, although this is not possible in all TDI applications. Additionally, prices for MDI have also shown significant year-on-year price increases.

TECHNOLOGY

TDI has two isomers: 2,4-TDI and 2,6-TDI. The most common form of TDI offered commercially is an 80/20 mixture of the 2,4- and 2,6-isomers, but it is also ava ilable as a 65/35 mixture and as a pure 2,4-isomer.

The main route is the nitration of toluene to dinitrotoluene, followed by catalytic hydrogenation to toluene diamine (TDA), which is dissolved in an inert solvent and reacted with phosgene to produce a crude TDI solution. TDI can also be produced directly from dinitrotoluene by liquid phase carbonylation with o-dichlorobenzene.

Germany’s Covestro, formerly Bayer MaterialScience, developed a route that carries out phosgenation in the gas rather than the liquid phase. The technology was already commercialised at its worldscale 250,000 tonne/year TDI plant in Shanghai, China. Covestro has also been running a 30,000 tonne/year pilot plant since 2004 and is thought to have used this technology in its new 300,000 tonne/year TDI plant in Dormagen, Germany, which came on stream in late 2014.

OUTLOOK

TDI prices are likely to see further increases over the medium term, but prices may start to move lower in late 2017 or early 2018 as new capacities start to come online while existing plants begin to return to normal operations.

As supply normalises, buyers are likely to push for lower prices in an effort to repair margins, which have seen considerable compression in 2017 owing to significant price increases for TDI as well as other polyurethane feedstocks.

TDI demand growth has been healthy in the US for much of 2017, although there has been some slowdown in demand for new vehicles. Clean-up efforts following Hurricane Harvey, which may prove to be the most economically devastating natural disaster in US history, may give a boost to TDI demand in the construction, furnishing and automotive sectors over the next several months.