In January, BASF shut down its toluene diisocyanate production at its Ludwigshafen factory, and a spokesman for the German chemical leader said later Tuesday that production will resume in the second quarter.
BASF shut down its TDI production in late January for equipment maintenance and installation of another new reactor, the spokesman added. The new reactor will be delivered in early March.
The new reactor will be operational in the second quarter and production will resume. "
'We will provide BASF's global TDI production network service to customers.'
The new unit, with a capacity of 300,000 tpa, was put offline in November 2016 due to a damaged reactor before going live in May 2017 and is scheduled to be fully overhauled by 2018.
Before the unit restarted in May last year, BASF said the plant will resume operation but operating rates will be reduced.
Market participants attributed the tightness of supply to the Ludwigshafen factory operating rate since its restart has been unknown, thus contributing to price increases.
After BASF claimed that the production of the Ludwigshafen plant will resume in the second quarter, some TDI sources said they expect the supply shortfall to continue at least to July.
In addition, TDI prices rose to their all-time highs mid-point and market participants expressed concern over the January delivery of Western European destinations at € 3 320 / t.
"What's going to happen in the second quarter is hard to say now, and maybe we can see some progress until then," one buyer said.
But I do not know, and we are looking forward to long progress, and it is still difficult. Let us wait and see.
Saudi Arabian producer Sadara Chemical Supplies 200,000 tons / year supply of the Jubail plant later did not have any impact on the European supply side.
Market sources said the shipments have been slow to deliver the goods recently, and many have previously said that Sadara Chemical TDI's main destination will not be Europe, but should be in Africa and other regions.
'I think the more secure one is that the same situation will continue into the second quarter, such as supply shortages,' one distributor said.
In the meantime, the contract in early February has already agreed a 50-100 euro / ton increase, due in particular to supply issues.
There are also market participants believe that in January the German supplier Covestro face production difficulties, the same is the impact of supply levels.
However, a Kosstone spokesman told us on Wednesday: 'There is no limit to our ability to deliver TDI in the EMEA (Europe, Middle East and Africa) region.'
As there is no production problem on the market, the latest BASF news shows that upward pressure will likely persist in the coming months.
TDI's main market is polyurethane flexible foam, which is used in the areas of soft furnishings, mattresses and car seats, etc. Soft foams are made from the reaction of TDI with a polyol.