China’s MDI Industry Looks Promising



By Zhang Yue, China National Chemical Information Center



Capacity is increasing



As of the end of 2013, China’s total capacity for diphenyl methane diisocyanate (MDI) was 1 990 kt/a. The only three producers are Wanhua Chemical Group Co., Ltd., Bayer (Shanghai) Polyurethane Co., Ltd. and Shanghai Lianheng Isocyanate Co., Ltd. Their respective MDI capacities are 1 400 kt/a, 350 kt/a and 240 kt/a.

At the end of 2013, Wanhua had completed technical upgrading and capacity expansion of its production base in Ningbo, increasing the company’s capacity there to 1 200 kt/a. In 2014, Wanhua will complete the construction of a new 600 kt/a MDI project in Yantai of Shandong, making Wanhua one of the largest MDI producers in the world. China’s major producers are listed in Table 1. This year, China’s total capacity will increase by 550 kt/a: a 600 kt/a unit in Yantai constructed by Wanhua and a 150 kt/a unit in Shanghai constructed by Bayer will both be put into production. Once Wanhua’s new 600 kt/a unit comes on line, the company will shut down an old 200 kt/a unit. Also, as shown in Table 2, BASF, Bayer and Huntsman, are planning several MDI projects.





Table 1   China’s MDI producers, 2013 (kt/a)



Company????????????????    Location???????    Capacity

Wanhua Chemical Group Co., Ltd.?    East China???????    1 400

Bayer (Shanghai) Polyurethane Co., Ltd.    East China???????    350

Shanghai Lianheng Isocyanate Co., Ltd.    East China???????    240

Total?????????????    1 990





Table 2   New MDI capacity under construction or being planned in China (kt/a)



Company    Location    New

capacity    Time to start

production    Remarks

Wanhua Chemical Group Co., Ltd.    Yantai of

Shandong    600    2014    Relocation and expansion, an existing 200 kt/a unit will be shut down.

Bayer (Shanghai) Polyurethane Co., Ltd.    Shanghai    150?????    2014    

BASF    Chongqing    400    -    Under construction, startup time

undetermined.

Shanghai Lianheng Isocyanate Co., Ltd.    Shanghai    240    -    Construction starting July 1, 2014, startup by 2017



Bayer (Shanghai) Polyurethane Co., Ltd.    Shanghai    500    -    In planning

Total    1 890    -    







Import volume surged 42% year-on-year



The volume of MDI imported to China in 2013 was 459 kt, up 42% year-on-year; the export volume was 285 kt, up 5% year-on-year.

In 2013, the average price of polymeric MDI exported from China was RMB15 795/t, while the average domestic price was RMB16 521/t. Domestic producers were hurt by the import of low-priced polymeric MDI products from Japan and South Korea.

In 2013, 352 kt of polymeric MDI was imported to China, surging 58% year-on-year, mainly from Japan, South Korea and the United States, accounting for 53%, 28% and 10% of the total import volume. In the same year, 229 kt was exported, up 3% year-on-year. Major export destinations were the United States, South Korea, India and Turkey. See Figure 1 for details.

In 2013, 106 kt of pure MDI was imported to China, up 6% year-on-year, mainly from Japan (54%) and South Korea (35%). The export volume was 55 kt, up 8% year-on-year, mainly to Taiwan (24%), Turkey (18%) and Singapore (14%). See Figure 2 for details.



Market for downstream insulation products booms



The total consumption of MDI in China increased 13% in 2013 to 1 700 kt, of which 1 180 kt was polymeric MDI and the other 520 kt was pure MDI. Polymeric MDI is usually used to produce polyurethane insulation materials, microporous integral skin foams, automobile bumpers and interior trims, synthetic wood, etc. Pure MDI can be used to produce non-foaming products like pulps, polyurethane resins for shoe soles, spandex, etc. China’s 2013 MDI consumption structure is shown in Figure 3.

In China, the refrigerator and freezer industry is the largest MDI consumer, accounting for about 40% of total consumption. The second largest is the manufacture of polyurethane resin for shoes, accounting for about 20%. In the future, the consumption of MDI in making insulation materials is expected to increase rapidly.



Price decreased



Unlike the continual price rise in 2012, MDI prices fluctuated all year in 2013 (see Figure 4 for detail). The average price in 2013 was RMB16 521/t, down 3.2% year-on-year. The decline is mainly attributed to a dramatic increase in imports from Japan and South Korea. However, domestic MDI producers are consistently profitable despite the downturn price fluctuation.



Industry remains optimistic



Currently, although there are only three MDI producers in China, the capacity for MDI is increasing rapidly and several large MDI production bases are under construction. It is expected that the new capacity constructed from 2014 to 2018 will amount to 550 – 950 kt/a. As the deficit in 2013 was 459 kt, the supply of MDI in China will continue to be tight, and domestic producers can continue to dominate the market. In a nutshell, the outlook for China’s MDI industry is promising for the foreseeable future.