China’s MDI Market in 2015

By Chang Min, China National Chemical Economic and Technical Development Centre

1. Supply

The number of MDI producers in China totaled six at the end of 2015. Boasting a combined capacity of 3.02 million t/a, up 15.3% YoY, they produced around 1.97 million tons of MDI in 2015, up 4.8% from a year earlier.
The largest domestic MDI producer, Wanhua Chemical Group Co., Ltd. (Wanhua) operated 59.6% or 1.8 million t/a of the nation’s MDI capacity in 2015, followed by Bayer (Shanghai) Polyurethane Co., Ltd. (16.6% or 500 kt/a). Except for Wanhua, all the producers are foreign enterprises or joint ventures.
China’s MDI output rose from 904 kt in 2010 to 1.97 million tons in 2015, up 16.8% annually. In October 2015, a new 400 kt/a MDI unit of BASF Polyurethane (Chongqing) Co., Ltd. kicked off in 2011, was put into production.
Today, domestic MDI producers face many difficulties like severe overcapacity and relatively low operating rates. In the next few years, eastern China and northern China will host most of the new capacity. With the largest customer base, geographical advantage and good production units, eastern China has become increasingly important for foreign firms such as Bayer to expand capacity and secure their presence in China. In northern China, MDI producers are in urgent need of extending their industrial chains to increase financial benefits.

Table 1   China’s MDI producers, 2015

Company    Location    Capacity (kt/a)
Wanhua Chemical Group Co., Ltd.    Yantai, Shandong    600
Wanhua Chemical Group Co., Ltd.    Ningbo, Zhejiang    1 200
Bayer (Shanghai) Polyurethane Co., Ltd.    Shanghai    500
Shanghai Lianheng Isocyanate Co., Ltd.    Shanghai    240
Ribang Polyurethane (Ruian) Co., Ltd.    Wenzhou, Zhejiang    80
BASF Polyurethane (Chongqing) Co., Ltd.    Chongqing    400
Total    3 020


Table 2  China’s MDI capacity to go on stream in the next few years

Company    Location    Capacity
(kt/a)    Scheduled startup time
Bayer (Shanghai) Polyurethane Co., Ltd.    Shanghai    500    2016
Shanghai Lianheng Isocyanate Co., Ltd.    Shanghai    240    2017
Connell Chemical Industry Co., Ltd.    Cangzhou, Heibei    800    2018
Total    1 540    -


2. Demand

China’s apparent consumption of MDI reached 1.9 million tons in 2015, with an average growth rate of 10.6% during 2010-2015.
Domestically, polymeric MDI and pure MDI remained the two major MDI varieties in 2015. Most polymeric MDI was used in household appliances, insulation and energy-saving materials for building, vehicles and furniture, while pure MDI was mainly consumed in making PU sizing agents and sole resins. In the downstream sector, 45% of MDI was in making household appliances, 18% in insulation and energy-saving materials for building, and 13% in vehicles. Consumption in making PU sizing agents and sole resins grew stably.

3. Import and export

China imported 374 kt of MDI in 2015, down 11.7% YoY, totaling US$329.12 million. Of that, pure MDI reached 107 kt, valued at US$210.88 million, while polymeric MDI totaled 266 kt, valued at US$400.33 million.
Japan was the largest provider of pure MDI in 2015, accounting for 55.7% of China’s total pure MDI imports, while Korea provided 35.2% and Belgium 5.4%.
As for the sources of polymeric MDI imports, 91.4% came from Japan (56.9%), Korea (24.7%) and the U.S. (9.8%), and the imports were mainly received by Zhejiang province (28.7%), Shanghai city (27.5%) and Shandong province (14.9%).
China exported 444 kt of MDI in 2015, up 13.9% YoY, totaling US$1.01 billion. More specifically, pure MDI export reached 62 kt, valued at US$118.24 million, and polymeric MDI reached 382 kt, worth US$607.73 million.
Pure MDI was mainly exported by firms in Zhejiang province (56.9% of the total exports) and Shanghai city (39.7%). Taiwan, Singapore and India were three major destinations, absorbing 22.1%, 13.6% and 8.5%, respectively.
  Most polymeric MDI exports came from Zhejiang province (69.6% of the total exports), Shanghai city (16.3%) and Shandong province (12.8%). Major destinations included the U.S. (33.4%), Korea (8.1%) and Japan (7.9%).


Table 3   China’s MDI consumption during 2010-2015  (kt)

Year    Output    Import    Export    Apparent consumption    Self-sufficiency (%)
2010    904    459    215    1 148    78.7
2011    945    382    238    1 089    86.7
2012    1 197    323    270    1 250    95.8
2013    1 590    458    285    1 764    90.1
2014    1 877    423    390    1 910    98.3
2015    1 968    374    444    1 897    103.7


Table 4  China’s MDI foreign trade, 2010-2015

Year    Import    Export
    Volume (kt)    Value (million US$)    Volume (kt)    Value (million US$)
2010    459    349.0    215    868.0
2011    382    367.7    238    887.4
2012    323    364.6    270    896.0
2013    458    404.9    285    1 224.4
2014    423    378.2    390    1 305.5
2015    374    329.1    444    1 008.1


4. Prices

Propelled by the spandex market, China’s pure MDI prices reached a peak of RMB19 300/t in January 2015, and remained at a high level of RMB18 800/t until May. Then prices fell, reaching RMB14 700/t in early December, and rebounded slightly at the end of that month. In eastern China, pure MDI prices rose to the top in January 2015 (monthly average, RMB19 105/t), and fell to the bottom in November (monthly average, RMB14 700/t), with an annual average price of RMB16 975/t.
Domestic prices of polymeric MDI peaked at RMB13 500/t in January 2015, declined to RMB9 100/t in October and then rebounded to RMB11 000/t. In eastern China, prices peaked in early January, reaching RMB13 500/t, and hit the bottom of RMB9 100/t in October. The annual average price was RMB11 242/t. Polymeric MDI prices can hardly grow rapidly in the future, as severe competition is curbing profits.