TDI Sector in Transition from Growth to Maturity

By Zhang Yue, China National Chemical Information Centre

Toluene diisocyanate (TDI) is an important raw material of polyurethane. More than 65% of the TDI in China is used to produce polyurethane flexible foams. The balance is used to produce polyurethane coatings, polyurethane elastomers and polyurethane adhesives.

1. Rapid growth of capacity

The growth of China’s TDI capacity has been quite rapid. It was only 20 kt/a in 1990 but increased to 890 kt/a in 2014. The capacity grew in three main stages. The first stage (1990-2004) was quite slow, and the scale of enterprises was rather small (less than 50 kt/a). In the second stage (2005-2011), owing to the entry of European and American enterprises into the Chinese market, the capacity grew rapidly and the scale of enterprises tended to grow too. In the third stage (2012-2014), capacity growth slowed down, and a surplus of capacity emerged in the market. It is now expected that capacity will continue to grow slowly in 2015. Figure 1 shows the growth of TDI capacity in China during 2002-2014 and a forecast to 2020.
The overall operating rate of TDI units in China was 86% in 2014. The operating rate was very low during 2002-2005 – only 50% on average. As European and American enterprises constructed plants in China, and domestic enterprises adopted and assimilated technologies from abroad, the overall operating rate of TDI units increased drastically during 2006-2011, rising to around 70%. With the slowdown of capacity growth and a stable increase of demand, the overall operating rate of TDI units kept increasing during 2012-2014, being 82%. See Figure 2 for details.

2. Growth of scale

There were seven major TDI producers in China in 2014. See Table 1 for details. All producers use the liquid-phase phosgene process, except Bayer (Shanghai) Polyurethane Co., Ltd., which uses the vapor-phase phosgene process. Two foreign-owned enterprises, Bayer and BASF (Shanghai) Polyurethane Co., Ltd., have the biggest TDI capacities in China – together, they own 46% of the county’s total TDI capacity.  The TDI 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. Bayer and BASF (Shanghai) plan to renovate and expand TDI units.  

3. Stable growth of consumption

China consumed 730 kt of TDI in 2014, up 9.8% year on year. Consumption grew quite steadily during 2002-2014, averaging 9%-10% annually, but it is expected to slow down to 4%-5% annual growth, due to the economic slowdown in application areas, reaching 950 kt/a in 2020. See Figure 3 for details.

4. Decline of prices

The prices of TDI in China slid continually in 2014. The average price was RMB19 170/t in January and dropped 28% to RMB13 754/t in December. The average annual price was only RMB17 101/t in 2014, down 18% from the previous year. Prices have continued to slide in 2015; in February, the average price was only RMB11 492/t. See Figure 4 for details.

5. Import and export

China imported 37 kt of TDI in 2014, down 39% from the previous year, and exported 74 kt, an increase of 6%. China is gradually shifting from a net TDI importer to a net exporter.

6. Future development

There is no indication in the current environment that the domestic oversupply will change, so competition will undoubtedly be aggravated, prices will keep falling and profits will be squeezed further.
Over the years, TDI capacity in China gradually became sufficent, the overall operating rate increased from 50% to over 80%, single-unit scale grew from 20 kt/a to 70 kt/a, the scale of TDI enterprises also grew and consumption has always grown steadily.         

Table 1    Major TDI producers in China, 2014

Producer    Location    Capacity??(kt/a)    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