In October, the market prices of China polymeric MDI and pure MDI is in consolidation with the opposite trends, that is, the price of polymeric MDI moves back with a downward trend and the price of pure MDI is in consolidation with a upward trend.
Polymeric MDI - Moves Back with a Downward Trend
In the week before the National Day holiday in October, the China polymeric MDI market price ushered with a strong upward trend. It moved up rapidly from about RMB 21,000/ton on September 25 to more than RMB 24,000/ton on September 30. Before that, that is, from early September to September 25, the market price fluctuated in a narrow range of RMB 20,000-21,000/ton. The reason why the price range that has fluctuated for more than half a month has been suddenly broken is mainly due to:
 
1) Demand side: From the perspective of domestic short-term demand, the traders had expectations for the stock -up market trend of Chinese downstream factories during the National Day holiday. In terms of export demand, the China MDI export volume data released in August showed a year-on-year increase of 33%. In view of the fact that the force majeure of some overseas MDI units had not been lifted at that time, many sets of MDI units in Europe and Asia carried out the maintenance plan in October, and the market expected that the export volume of China MDI suppliers would remain strong upward trend in September, which was favorable to the release of inventory in that month.

2) Supply side: As the end of the month is approaching, the main distributors basically complete shipping. In October, some Asian suppliers shut down for maintenance, and the market expected the suppliers to maintain stable and relatively tight supply in October.
 
3) Raw material side: In September, the prices of various domestic raw materials overally rose one after another, involving MDI upstream raw materials such as pure benzene and liquid chlorine, PU rigid foam minor components such as phosphorous flame retardant TCPP, etc.
 
However, after National Day holiday, China polymeric MDI opened a high-level unilateral move-back. As of October 29, the market price of China polymeric MDI was RMB 20,500-21,000/ton, which had fallen back to the level before the above "upward trend during the National Day". Since mid-September, the policies of dual control of energy consumption and power and production restriction have been strictly implemented in many places in China, resulting in reducing the rate of China MDI downstream factories. The high price of raw materials and the shortage of some raw materials have a negative impact on the procurement demand of downstream factories and the stability of production plans.
 
In October, although some MDI suppliers controlled the volume in the distribution channel, other suppliers kept normal shipments and the overall supply was stable. In order to seize the tail of the "Silver October", most traders actively ship goods, and the negotiation price continues to be weak with a downward trend. The weekly guide price of Shanghai suppliers had been lowered for several consecutive weeks. The fixed price in the middle and late ten days of the month from northern big factories is RMB 23,800/ton, while the support for stable price was weak. Some traders & apos; panic and willingness to ship became heavier. As the end of the month approaches, with the next month’s list prices of China mainstream suppliers successively disclosed, the week on week was flat or moved down slightly, where the market was weak and the atmosphere was difficult to boost.

Pure MDI - The Trend Reverses and Moves Up

Driven by factors similar to the above-mentioned increase in the price of polymeric MDI and the "Driven factors" of the first increase in the market price of polymeric MDI, the China pure MDI offer moved up slightly to RMB 22,000-23,000/ton in the last two days of September. In October, the pure MDI offer moved up slowly and steadily. As of October 29, the offer price of pure MDI market was RMB 23,500-24,000/ton, with an increase of 5.6% in the current month.
 
However, compared with the downstream industry of polymeric MDI, the production and operation of pure MDI downstream factories have been more affected by external disturbance factors in recent months. Factor 1, the epidemic situation in Fujian Province in September led to the temporary shutdown of many local shoe factories and the home quarantine of workers; Factor 2, from September to October, the prices of various raw materials moved up strongly. For example, BDO rose from RMB 27,400/ton in early September to RMB 30,800/ton on October 29, with an increase of 12.4%. Adipic acid AA increased from RMB 10,200/ton in early September to RMB 12,800/ton on October 29, with an increase of 25%; Factor 3, power and production restriction since mid-September had affected the operation rate of downstream factories in Jiangsu province, Zhejiang province and South China. Affected by this, downstream factories of pure MDI, such as shoe soles and PU resin factories, operated at a low rate of 40-50%, where TPU and spandex factories also lowered the rate and production to varying degrees, and the demand for the production of pure MDI and other raw materials was further restrained.

On the favorable side, the export volume of China pure MDI picked up to double-digit growth in September, with a week-on-week increase of 38.5% and a year-on-year increase of 27%. The volume of exports to India, Vietnam and other countries moved up significantly in the month, with an increase of more than 9,000 tons month on month compared with August, which was related to the gradual recovery of local production activities from the epidemic. In addition, the volume of exports to Brazil, Turkey and the United States also increased significantly month on month.
 
At the end of October, the list and guide prices for pure MDI in November disclosed by major Chinese suppliers such as Wanhua, BASF and Huntsman remained stable at a high level week on week. Yesterday (November 1), Shanghai suppliers raised the latest guide price to RMB 24,200/ton. Overally, it indicated the suppliers’ expectation that the pure MDI market would be stable and favorable this month. For pure MDI, the market suppressed by multiple bearish factors had experienced. Next, if the global epidemic prevention and control was further improved, where economic, production and consumption activities were further recovered; it would be conducive to the recovery and development of pure MDI and its downstream industries.