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China: Prediction of China's TDI Market in Q3

https://www.chemnet.com   Jul 23,2010
In the first half of 2010, TDI prices went down to lowest point, almost duplicating the price trend in 2008. Stockpiles could not be digested in time due to weak demand while imports prices were even lower than the cost prices. Thereby the whole market kept dull. From the end of June to the beginning of July, low-end transaction prices of homemade materials declined to Rmb 20000/ton below while imports prices dropped to $2350/ton. As most downstream initiated to establish stockpiles, prices recovered from the bottom level. In the beginning of the third quarter, the stockpiles kept in the low level while quotations stood firm. According to Zhao Lijuan, analyst from P.H. Consultant, TDI market was predicted to pick up with fluctuation in Q3.


Although downstream sponge factories operated at relatively low rates, stockpiles had been successfully transferred from manufacturers to downstream buyers and traders due to low prices. According to Zhao, as most stockpiles would not be digested out until the mid or late August and stockpiles in some small downstream factories could not be consumed until the end of this year, TDI market was predicted to kept dull in August while there was no support for price-up. Since traditional boom season would come in Sept, prices may be adjusted downward in late August to make preparation for price-up in Sept.


As yet, stockpiles in domestic TDI factories kept limited. Gansu Yinguang’s 100kt/y facility shut down while Mitsui delayed start up of its facility in Kajima put off the restart date. Besides, KPX Fine Chemical’s 50kt/y production line also shut down. As a result, there would be no large amounts of materials available in domestic market. It was predicted that market would prick up while transactions would mainly kept stable. Although prices rose slightly, downstream factories would still purchase on a hand-to-mouth basis due to comparatively low prices. Therefore, suppliers would stand firm on prices due to the increasing demand.


Besides, with supplies climbing, stable homemade supplies reduced price fluctuations. As a result, traders showed little interests in buying and selling due to shrinking profit margin. Thereby, demand became a key factor for the market trend. So it was predicted that prices would mainly keep fluctuating in August and went up in Sept driven by strengthening demand.
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