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Will THAAD Affect Chinese TDI Market

Will THAAD Affect Chinese TDI Market2017.03.17

2016 import and export data showed that China imported 60% of TDI from South Korea and 30% from Japan. It is not a surprise that the prices are so volatile, as trans-regional transactions are generally more risky.

Chinese manufacturer controlled supply & buyers increased import

Last year, China TDI market was soft. Since the beginning of 2016, the production equipment malfunctions and reduction of output in China and abroad has led to market shortages. Therefore, last April Chinese customers have relied more on import. However, the market is in the low season, in addition, influenced by rain season in southern area, effects of toxic plastic track and other factors. buyers overall remained significant resistance. Although factory shutdown and other factors boosted the market, it still does not see substantial improvement. Factories had controlled the supply quantity since September, then customers turned to the imported sources.

Limited TDI import

Last year's import and export data showed that China has TDI annual capacity of 840,000 tons in 2016, but the total annual import amount of TDI in 2016 was only 28,200 tons. Therefore, China's total import amount of TDI is still limited, TDI from Korea also has a good upward potential.

Moreover, Chinese TDI export reached 136,000 tons last year, which sharply increased 85.99% compared to those of 2015. Meanwhile, the TDI export amount is far beyond the import.

China TDI impotr and export data

On the one hand, a great amount of imported TDI is used for OEM and carrying trade. These import TDI benefit from zero import duty and the finished products are rarely sale in China. On the other hand, the transactions of global primary markets are relatively stagnant, in addition, downstream factories have difficulties in maintaining stable operations due to cost pressures. Therefore, the impact of THAAD on Chinese import should be minor.

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