TDI Sector in China Can Hardly Find Development Options

By Zhang Yue, China National Chemical Information Center

TDI is an aromatic isocyanate. It is an important raw material for polyurethane production. More than 65% of TDI in China is used to produce flexible polyurethane foams. The balance is used to produce polyurethane coatings, polyurethane elastomers and polyurethane adhesives.

Capacity surplus becomes more severe

As production technologies are becoming well developed, new and expansion projects of raw materials such as MDI, TDI and PO have made rapid development. The capacity for TDI in China was 890 kt/a in 2013, an increase of 13% over the previous year. The output was 720 kt and the operating rate was 81%. Table 1 shows the production of TDI in China during 2003-2013. It can be seen that the capacity grew more than tenfold. The average annual growth of the TDI capacity reached as high as 21% during 2008-2013.
There were seven major TDI producers in China in 2013. See Table 2 for details. Except Bayer (Shanghai) Polyurethane Co., Ltd., which uses the vapor-phase phosgene process, other producers all use the liquid-phase phosgene process. It can be seen from Table 2 that the top two producers are both foreign-owned enterprises with large production scale, and their capacity accounts for 46% of the domestic total. The single-unit TDI scale in China is quite small. The biggest single-unit capacity is only 70 kt/a and the average single-unit capacity is 50 kt/a. The sector is in urgent need of industrial upgrading.
A 300 kt/a TDI unit of Yantai Wanhua Polyurethane Co., Ltd. is planned to start production in 2015. TDI units of Bayer (Shanghai) Polyurethane Co., Ltd. and BASF (Shanghai) Polyurethane Co., Ltd. are planned for renovation and expansion that year. The scale of TDI producers will be enlarged, the concentration degree of production will be higher and small state-owned enterprises will be in a difficult position at that time.

Table 1   Production of TDI in China  (kt/a)

                     2003    2008    2012    2013    2014E
Capacity              85     340     790     890     890
Output                44     298     662     720     770
Operating rate (%)    51.8    87.6    83.8    80.9    86.5


TDI production in China is mainly concentrated in East China, especially in Shanghai. The capacity for TDI in East China was 590 kt/a in 2013, accounting for 66% of the total, in which the capacity in Shandong was 410 kt/a, accounting for 46%. The capacity for TDI in North China was 150 kt/a, accounting for 17%. The capacity for TDI in Northwest China was 100 kt/a, accounting for 11%. The capacity for TDI in Northeast China was 50 kt/a, accounting for 6%. There was no TDI production in Southwest China or South China. See Figure 1 for details.

Reduction of export opportunities

The volume of TDI imported to China was 60 kt in 2013, an increase of 22% over the previous year. The export volume was 69 kt, a drop of 16%. The net export amount was 9 kt, a drop of 72%.
Figure 2 shows the import/export volumes and the import/export prices of TDI in China during 2002-2013. It can be seen that the import volume of TDI to China declined constantly whereas the export volume increased gradually in the past 12 years. A net export was also achieved from 2012. The amount of TDI exported from China was only 1.427 kt in 2002 but reached 69 kt in 2013.
Both the import price and the export price of TDI in China presented a trend of going up first and coming down later during 2002-2013. The export price of TDI was higher than the import price during 2002-2010. The import price of TDI was higher than the export price during 2010-2013.

Table 2   Major TDI producers in China, 2013 (kt/a)

Company    Location    Capacity    Production process
Bayer (Shanghai) Polyurethane Co., Ltd.     East China
    250    Vapor-phase phosgene process
BASF (Shanghai) Polyurethane Co., Ltd.     East China
     160    Liquid-phase phosgene process
Cangzhou Dahua Group Co., Ltd.     North China
    150    Liquid-phase phosgene process
China Norinco Group Yinguang Chemical Industry Group Co., Ltd.     Northwest China
    100    Liquid-phase phosgene process
    Northeast China    50    Liquid-phase phosgene process
Fujian Southeast Electrochemical Co., Ltd.    East China    
100    Liquid-phase phosgene process
Yantai Juli Isocyanate Co., Ltd.     East China    
80    Liquid-phase phosgene process
Total    890    


In March 2012 the Ministry of Commerce of China launched antidumping investigation into the import of TDI originating from the EU. The import volume of TDI from the EU was therefore greatly reduced. The amount of TDI imported from EU was around 29 kt in 2011, accounting for 40% of the total. It dropped to 3.926 kt in 2012, accounting for 8% of the total and being 86% lower than 2011. It came further down to 3.573 kt in 2013, accounting for 6% of the total and being 9% lower than 2012.
In February 2014 Japan launched a one-year antidumping investigation into the TDI originating from China. As the amount exported by domestic producers was small, the impact produced was very little. The amount of TDI exported by China to Japan was 12 kt in 2013. The export was totally made in the form of processing by imported material. TDI for export was mainly from foreign-funded enterprises such as Bayer (Shanghai) Polyurethane Co., Ltd.
Figure 3 shows the major origins and destinations for China’s import and export of TDI in 2013. Import sources of TDI mainly included Korea and Japan and the amount imported from these two countries accounted for 82% of the total. Export destinations of TDI mainly included Taiwan, Japan and Hong Kong.

Price approaching the cost line

The price of TDI in China is mainly determined by supply/demand relationship in market. In a macro environment of capacity surplus, there is feeble backing for a price rise today.
The price of TDI in China had an overall trend of going up first and coming down later during 2011-2013. The price was the lowest in 2011 and the average annual price was RMB19 428/t. The price was at a high level in 2012 and the average annual price was RMB22 326/t. The price of TDI in China had a trend of wave-like drop with a reduction of 13% in 2013 and the average annual price was RMB20 852/t. See Figure 4 for detail.

Grim prospect of the TDI sector

The capacity of the 100 kt/a TDI unit in Fujian Southeast Electrochemical Co., Ltd., completed at the end of 2013,  commissioned in 2014. Frost will be added to snow in the TDI sector, which already has capacity surplus. The downstream demand also has sustained slackness, and there are fewer export opportunities. The competition among enterprises will be fiercer, the prices of products will remain low and the financial losses of producers will become more serious.