The SUPPLY of methylene diphenyl diisocyanate (MDI) in the United States is facing further tightening due to the shortage of raw materials used in isocyanate production.
Dow and Costco recently declared force majeure at their U.S. MDI plants, while Huntsman is experiencing partial shutdowns at its Geisma, Louisiana, MDI plant, and all three cited a shortage of raw materials as the main reason for the decline in operating rates.
The effects of Hurricane Laura, Delta
The impact of Hurricanes Laura and Delta in the Gulf of America has resulted in a shortage of some MDI intermediate chemicals.
While the HURRICANE did not have a major impact on the GULF MDI plant in the US, factories producing intermediate chemicals such as aniline, nitrobenzene and chlorine were restricted.
Logistics have also been disrupted by the closure of railways and waterways, which has also limited the supply of intermediate chemicals to isocyanate plants.
U.S. chlorine-alkali plants have been operating at multi-year lows since the coronavirus outbreak, according to the Chlorine Institute, with September rates down from August.
Westlake’s 1.29 million-ton/year chlorine gas plant in Lake Charles, Louisiana, suffered a lengthy shutdown after weeks of power outages in large parts of the area, caused by Hurricane Laura, disrupted chemical production in the Lake Charles area.
Carbon monoxide problem
A recent shortage of carbon monoxide (CO) has also contributed to the shortage of MDI.
Chlorine reacts with CO to form phosgene, and then reacts with methylene diphenylamine (MDA) to form MDI.
While demand for MDI and downstream polyurethanes has been increasing, shortages of these intermediates have reduced MDI utilisation rates in North America.
Rebound in demand
MDI, which had seen consumption fall sharply in the second quarter during the most stringent coronavirus restrictions on economic activity, began a strong recovery in demand in the third quarter.
The auto industry has seen a sharp rise in capacity in recent months as auto and auto parts makers try to replenish their supply chains, after industry-wide capacity fell to record lows in April and May.
Demand for home appliances has risen in recent months as consumers have delayed travel and entertainment spending and spent a significant portion of their disposable income on home renovations.
Construction is also a strong driver of MDI demand, with residential construction activity picking up as some buyers opt for larger houses in the suburbs rather than in the cities.
MDI is used primarily in polyurethane foams and accounts for about 80% of global consumption. Rigid foam is MDI’s largest application in construction, refrigeration, packaging and insulation. MDI is also used in the manufacture of adhesives, elastomers, adhesives, sealants, coatings and fibers.
The leading MDI producers in the US include BASF, Kostron, Dow and Huntsman.