Price of Toluene di-isocyanate (TDI) are on a downward trend much to the relief of the foam manufacturers in the country. TDI prices have eased from Rs 280/Kg in September 2018 to average price of Rs 133/Kg in the second quarter of this financial year. According to industry experts, the downward trend in the prices is likely to continue due to over capacity.
TDI is the main raw material used by the foam (used in furniture and bedding) manufacturers and the price of the same had nearly trebled during the period between 2016 and 2018. For example, price of TDI was Rs 118/kg in April 2016 which had touched Rs 325 – Rs 335/kg level in February 2018. However, price is steadily coming down since then.
Global TDI prices are mainly ruled by the availability of capacity. During the period between 2014-16 several capacities were shut down leading to a sort of supply tightness in the market. However, closure of several capacities would have been more than compensated if 200,000 tonnes/year Sadara facility in Saudi Arabia and BASF’s 300,000 tonne/year facility at Ludwigshafen, Germany had started their operations as per schedule. But that could not happen due to technical and other reasons, supply tightness continued for almost two years taking the prices of TDI to new highs and at the same time putting the users of the product to great discomfort.
However, with commissioning of BASF and Sadara plants in 2018, supply tightness seen during 2016-18 has eased considerably thus taking the pressure off the commodity’s price. It should be noted that global TDI capacity is around three million tonnes and BASF’s new plant accounts for nearly 10% of the global capacity. BASF and Sadara plants have added half a million tonne capacity in 2018 thereby changing supply scenario altogether.