US MDI Market Faces Setback as Prices Decline in May 2024

The Methylene Diphenyl Diisocyanate (MDI) prices decrease in the USA during May 2024. It recorded a 2% decline amid stable demand and improved availability of supplies in the market. The demand for MDI was moderately low from the downstream Polyurethane industries due to declined offtakes from the Automotive sector amid oversupplies of Chinese EV vehicles in the international market. However, US light vehicle sales reached 15.4 million units (annualized) in the first quarter of 2024, reflecting a 2.7% increase compared to the previous year.

At the same time, the market experienced ample availability of MDI stocks, caused by the firm operating rates at manufacturing facilities and moderate offtakes from the buyers.  Meanwhile, the manufacturing rates were intermediate amid a shift in cost support on feedstock Benzene and Aniline and moderation in upstream supplies. The MDI feedstock Benzene prices rose in the second half of the month due to the decline in Crude Oil stockpiles in the US. It raised the production costs of MDI. Simultaneously, the cost support was firm from feedstock Aniline due to increased quotations from the Asian exporters.  Previously, BASF, in Geismar, with an MDI production capacity of 25000 TPM, was under Force Majeure from 26th April 2024 till 12th May 2024. After that, production rates improved, and the availability of supplies was firm in the market. In May 2024, the US Manufacturing Purchasing Managers' Index rose above 50, indicating expansion in manufacturing sector activities.

The demand for MDI was moderately low from the buyers. During the initial quarter of 2024, Dow Chemicals noted a reduction in net sales within the Polyurethanes & Construction Chemicals sector in contrast to the preceding year. This decline predominantly stemmed from local price adjustments, albeit partially offset by heightened volumes across all geographic segments. Sequentially, net sales remained unchanged, with gains in price and volume in the U.S. & Canada and EMEAI offset by reduced volumes in Asia Pacific, attributed to the typical Lunar New Year seasonality. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% in April on a seasonally adjusted basis after rising 0.4% in March.

According to the ChemAnalyst data sources, the MDI Polymeric Grade FOB Louisiana prices in the US assembled at USD 2490/MT, at the end of May 2024.

As per the estimation, the MDI prices may increase towards the end of the second quarter of 2024. The MDI consumption rates may remain firm from the Polyurethane manufacturers during summer. Simultaneously, production costs may incline further due to the anticipated escalation in Benzene price towards the end of Q2 2024.