Rising US Toluene Diisocyanate Prices Driven by Supply Shortages and Steady Demand

In the USA, the market players raised Toluene Diisocyanate quotations by 3.6% during August 2024. The demand for Toluene Diisocyanate to produce polyurethane foam and resin was steady from buyers, while supply availability was inadequate in the market due to shipment delays. The orders for Toluene Diisocyanate to produce polyurethane resin were steady due to increased consumption of end-use materials in the Construction sector. In the U.S. construction sector, the Dodge Momentum Index (DMI) saw a significant 10.4% rise from May to June and is 7% higher than last year, reflecting a surge in large-scale projects exceeding USD 100 million and a growing emphasis on data center construction. This uptick indicates a robust expansion within the industry, with major projects advancing through the planning and execution phases. Additionally, construction cost inflation has moderated, with the national average increase at 1.12% in Q2 2024, down from 1.31% in Q1. Year-over-year, the cost increase has also eased to 5.41% from 5.85%, suggesting a slight relief from rising expenses for construction projects.

The US Manufacturing Purchasing Managers' Index decreased in July from its June level, reaching its lowest point in six months. This decline signifies a slowdown in manufacturing activity and indicates a contraction in output relative to previous periods. Simultaneously, the Covestro, in Texas, with Toluene Diisocyanate production capacity of 18333 TPM, went under force majeure from 8th July 2024 to 15th July 2024 due to hurricane Beryl. It limited the availability of Toluene Diisocyanate supplies and caused delays in shipments. As a result, market inventory levels declined due to consistent demand and purchases from domestic and regional buyers. At the same time, Toluene Diisocyanate exports to importers were low, and the US Exports sub-index saw a significant month-on-month decline, reaching its lowest level since October 2021. In response to ongoing concerns about equipment availability, the Federal Maritime Commission (FMC) has implemented a new rule under the Ocean Shipping Reform Act to protect US exporters. This regulation addresses concerns that carriers may prioritize returning empty containers to the Far East rather than making them available for US exporters. According to the ChemAnalyst data sources, at the end of August 2024, the Toluene Diisocyanate (T80) FOB Texas prices in the USA witnessed USD 2840/MT.

As per the anticipation, the demand for Toluene Diisocyanate may remain firm for PU foam and resin manufacturers to produce construction materials. Consequently, the Toluene Diisocyanate prices would remain firm in the North American region during the third quarter of 2024 as the market player might raise their quotations to improve their profit margins. Simultaneously, the production costs of Toluene Diisocyanate are likely to increase due to the anticipated incline in feedstock Toluene prices in the upcoming weeks.