Toluene Diisocyanate (TDI) prices increased in March 2025. The production rates were impacted by supply chain issues and rising costs due to port strikes in the European region. Amidst the consistent demand from the automotive and construction sectors, TDI prices are expected to rise in the next quarter due to increasing raw material and shipping costs. Additionally, Covestro's move towards sustainable, energy-efficient TDI production signals a shift towards premium-priced, environmentally friendly products.

TDI production rates in the region stayed at moderate levels due to the limited availability of feedstock toluene, which was impacted by supply chain disruptions. These disruptions were caused by higher crude oil prices, as well as geopolitical issues like U.S. sanctions on Iran and export restrictions, which led to uncertainties in the global oil supply. This, in turn, raised production costs.

At the same time, European ports faced disruptions from labor strikes at locations, including Marseille Fos and Le Havre in France. These strikes caused delays in container handling and land transport, which affected internal trade in Europe. Shipping companies had to reroute vessels around the Cape of Good Hope and other ports, further delaying deliveries to buyers and making it harder to meet demand from downstream industries.

Simultaneously, the demand for TDI used in Polyurethane (PU) materials remained consistent in the automotive and construction sectors. In the automotive industry, the selling rate saw a slight increase, despite a 2.6% drop in sales compared to last year. Geopolitical issues, like potential U.S. tariffs, which created uncertainty, while easing emissions standards provided some stability. In the construction sector, while the eurozone faced a decline, Italy experienced a small increase in new orders, helping to keep TDI demand steady in the region.

Additionally, Covestro's successful modernization of its Dormagen TDI plant is indicating a future market trend toward more sustainable and energy-efficient TDI production. The plant's 80% energy reduction along with 22,000-ton annual CO2 reduction, coupled with Covestro's ambitious global energy efficiency targets, suggest a shift towards premium-priced, lower-carbon footprint TDI. Given increasing regulatory pressures and consumer demand for sustainable products, TDI produced with advanced, energy-saving processes like those implemented in Dormagen is likely to command a competitive edge, and might lead to a bifurcated market with higher prices for "green" TDI in the future. This modernization will also strengthen the competitiveness of TDI production within Europe.

TDI prices are likely to increase further during the second quarter. The demand from downstream polyurethane segment is expected to stay consistent. Simultaneously, the production costs are likely to incline because of the anticipated increase in feedstock Toluene costs amid a rise in demand from downstream industries. It will push the price of TDI higher. Additionally, the shipping costs are also expected to remain higher during the period due to more trade activity during the summer.