Force Majeure at Covestro’s German Facility Likely to Impact Global MDI Prices

Chemical giant Covestro has announced a force majeure at its German factory due to which parts of Methylene Diphenyl Diisocynate production facility has come to a standstill. The force majeure was declared on 2nd July following a malfunction in its production line.

The company manufactures around 400 KTPA of MDI at its Brunsbüttel, Germany site that encapsulates around one-fifth of the total European production while 5% of the global production. Due to the prevailing shortage of Methylene Diphenyl Diisocynate across Europe, prices of the product are likely to witness further rise in the global market. As many of the Asian countries like India largely caters a prominent share of the demand from Europe, the repercussion of the production outage is expected to be visible on the Asian market as well.

In June, Huntsman Corporation, global leader of MDI proclaimed that the MDI market is high volatile in the present timeframe and is expected to witness further tightness in the second half of 2021 due to highly demanded and shrewd market.

MDI is majorly utilized to produce polyurethane foams, the segment accounts for around 80% of global MDI consumption. Other segments utilizing MDI include adhesives, elastomers, sealants, fibres and coatings.

As per ChemAnalyst, “Methylene Diphenyl Diisocynate prices for Asia in Q2 2021 have remained in the stable to firm range following a spate of routine maintenance turnarounds in China. Prices are expected to witness a further increment in the coming months. The price surge is unlikely to stabilize soon due to the increasing cost pressure from firming crude values.”