Sadara Chemical is a joint venture between USrsquos Dow Chemical and state energy firm Saudi Aramco Its chemical complex in Al Jubail has 26 integrated manufacturing plants which are set to produce over 3m tonnesyear of products according to previous company announcements At present isocyanates supply to the Middle East is mostly dominated by producers in northeast Asia and Europe Currently over half of the worldrsquos toluene di-isocyanate (TDI) and polymeric methyl di-p-phenylene isocyanate (PMDI) are produced in manufacturing plants in northeast Asia
In Iran Karoon Petrochemical largely supplies its domestic market from a 40000 tonneyear TDI unit and also recently inaugurated a 40000 tonneyear methylene diphenyl diisocyanate (MDI) installation in its southwestern Mahshahr petrochemical special economic zone
Elsewhere supply shortages in Europe over the last few months have slowed the flow from there to a trickle and northeast Asian producers have been in command for the last few months
Sadara has the potential to upset those dynamics Its home market for TDI and MDI is expected to be the Middle East and North Africa That means it would be selling isocyanates at likely lower shipping costs and with shorter delivery times providing stiff competition to current major producers who mostly ship their cargoes from plants in Asia According to the ICIS Supply and Demand Database MDI production in the Middle East is already set to more than double in 2017 from 2016 and by 2020 production of MDI would account for 51 of global output
TDI output from the Middle East is also expected to rise in 2017 from 2016 and is projected at 7 of the global total by 2020
For the northeast Asian producers it is all about making hay while the sun shines They foresee oversupply to persist in the market and believe prices will come back under pressure possibly forcing some producers to either idle or close their plants
2016 was a dramatic year for TDI prices in the Middle East In that year alone TDI import prices in the Gulf Cooperation Council East Mediterranean and Iran all fell to their lowest levels on record since ICIS began tracking the data before they then rebounded to their all-time highs in October
Looking at the trend in just the GCC which effectively mirrored the trend across the Middle East TDI prices retreated again in November but the decline halted in January 2017 TDI prices then rallied again to re-visit their record highs of $4050tonne CFR (cost amp freight) GCC in mid-March
MARKET INSIGHT
copy Copyright 2017 Reed Business Information Ltd ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report
Page 1 of 3
SADARA ENTRY A BOON FOR ISOCYANATES BUYERS BANE FOR PRODUCERS
By Izham Ahmad APRIL 2017
While major producers of isocyanates in northeast Asia are likely to bemoan the eventual entry of Sadara into the market their customers in the Middle East are likely to welcome the event seeing it as a gamechanger for supply-demand fundamentals
NORTH EAST ASIA1157
NORTH AMERICA350
EUROPE544
MIDDLEEAST100
ASIA AND PACIFIC43
NORTH EAST ASIA1138
NORTH AMERICA350
EUROPE525
MIDDLEEAST70
ASIA AND PACIFIC46
SOUTH amp CENTRAL AMERICA22
TDI Production in 2017 (lsquo000 tonnes)TDI Production in 2016 (lsquo000 tonnes)
MDI Production in 2016 (lsquo000 tonnes) MDI Production in 2017 (lsquo000 tonnes)
COUNTRYASIA AND PACIFICEUROPEMIDDLE EAST
NORTH AMERICANORTH EAST ASIASOUTH amp CENTRAL AMERICA
EUROPEMIDDLE EASTNORTH AMERICANORTH EAST ASIA
COUNTRY
NORTH EAST ASIA2671
EUROPE1750
NORTH AMERICA
1365
MIDDLE EAST 250
NORTH EAST ASIA2646
EUROPE1710
NORTH AMERICA
1305
MIDDLE EAST 90
SOUTH amp CENTRAL AMERICA22
copy Copyright 2017 Reed Business Information Ltd ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report
Page 2 of 3
SADARA ENTRY A BOON FOR ISOCYANATES BUYERS BANE FOR PRODUCERS
PMDI prices also increased in late 2016 though not quite as dramatically as TDI with offers at one point reaching $2100tonne CFR GCC the highest since June 2014 Prices eased after that but shortages persisted and PMDI prices rebounded sharply in 2017 to $2950tonne CFR GCC during the week ended 16 March their highest since ICIS began tracking PMDI prices in 2011
Market sources said the outlook for TDI and PMDI prices will hinge largely on the start of Sadararsquos isocyanates production They also highlighted another source of material that is likely to contribute to the pressure on prices which is BASFrsquos Ludwigshafen plant
The facility in Germany had already begun supplying TDI in late 2016 before an accident at the 300000 tonneyear plant caused disruptions In late November BASF suspended all TDI production at the facility for an indefinite period due to a technical issue
However in February 2017 BASF unexpectedly announced it will restart TDI production from the site ldquoin a few weeksrdquo It had initially expected to be restart production only in May or June In April a new back-up reactor had been installed at the plant suggesting it was ready to resume production albeit at lower-than-normal rates until a new reactor is installed in 2018
While BASFrsquos Germany-produced TDI cargoes are unlikely to be shipped to Asia they are expected to find their way to the Middle East and Africa where Sadara also hopes to make its mark
In the PMDI market meanwhile the worldrsquos major producer is currently Chinarsquos Wanhua Chemical which has a total production capacity of 18m tonnes annually from its three units Wanhua is also planning TDI production but the start-up date is not known yet
Sadararsquos PMDI production will add an additional 400000 tonnesyear of capacity into the PMDI market
Make no mistake though Sadara is about to enter what is generally accepted as an overcrowded and oversupplied market The key factor at play is that so far in the Middle East there are no major isocyanates producers and so buyers there essentially import almost all their materials from either northeast Asia or Europe
What has essentially kept prices propped up is that Sadararsquos isocyanates production has been repeatedly delayed The Al-Jubail facility is expected to include two isocyanates plants - a 200000 tonneyear TDI unit and the 400000 tonneyear PMDI unit
Output of PMDI is expected to start about the same time as most of its other downstream derivative plants which is estimated to be around mid-2017 TDI production meanwhile is expected by the second half of 2017 at the earliest
About the author
Izham Ahmad is a Market Editor at ICIS and is currently responsible for the isocyanates and polyether polyols markets for the Middle East Izham also covers the Middle East and South Asia markets for linear alkylbenzene (LAB) and the linear alkylbenzene
sulphonate (LAS) as well as the biodiesel and ethanol markets for the Asia-Pacific region
Find out more and download sample reports for
View all available chemical reports including polyolefins ethanol and base oils
Isocyanates (Middle East)
Polyether polyols (Middle East)
Linear alkylbenzene and sulphonate (LABLAS) (AsiaMiddle East)
The Sadara complex will add around 600000 tonneyear of isocyanates to the market
copy Copyright 2017 Reed Business Information Ltd ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report
Page 3 of 3
Middle East Chemicals Market Outlook 2017Currency fluctuations slow downstream demand new supply from China lsquoBrexitrsquo and a Trump Presidency are some of the major factors likely to affect key Middle Eastern commodity markets in 2017
Download our exclusive Middle East Market Outlook magazine for a more detailed and extended review of key commodity markets
Download the outlook at wwwiciscomMEOutlook2017
You can rely on ICIS for all your market intelligence needs
Find out more and download a free sample report
Request a free trial of ICIS news Find out more
Enquire now at wwwiciscomsupply-demand
Subscribe now at wwwicis-subscom
SUPPLY AND DEMAND DATA
Receive an end-to-end perspective across the global petrochemical supply chain enabling you to grasp the local or regional scenario in a global context Data includes import and export volumes consumption plant capacities production and product trade flows ndash from 1978 up to 2030
DIGITAL CHEMICAL BUSINESS MAGAZINE
ICIS Chemical Business (ICB) e-magazine is the No1 source of market intelligence and analysis of the global chemical markets It is the essential reading for global chemical industry players providing decision support for executives making current transactions as well as short term and long term planning
FORECAST REPORTS
ICIS publishes monthly forecast reports for polyethylene and polypropylene in Asia Europe and the US showing a 12-month rolling price forecast as well as details of supply and demand trade balances capacity and margins It is a valuable tool to identify commercial opportunities in the short to mid-term
PRICING INFORMATION
ICIS is the benchmark for independent and reliable price assessments on more than 180 commodities traded in regions such as Asia the Middle East Europe and the Americas Our reports also provide price histories and expert commentary to help you understand the key price drivers and market conditions and settle your contract prices confidently with access to time-sensitive offers bids and price movements
NEWS INFORMATION
Be the first to find out about breaking news and analysis across the global petrochemical markets Our market-moving news articles cover production updates plant capacities output and shutdowns plus so much more
You may also be interested in
copy Copyright 2017 Reed Business Information Ltd ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report
Page 2 of 3
SADARA ENTRY A BOON FOR ISOCYANATES BUYERS BANE FOR PRODUCERS
PMDI prices also increased in late 2016 though not quite as dramatically as TDI with offers at one point reaching $2100tonne CFR GCC the highest since June 2014 Prices eased after that but shortages persisted and PMDI prices rebounded sharply in 2017 to $2950tonne CFR GCC during the week ended 16 March their highest since ICIS began tracking PMDI prices in 2011
Market sources said the outlook for TDI and PMDI prices will hinge largely on the start of Sadararsquos isocyanates production They also highlighted another source of material that is likely to contribute to the pressure on prices which is BASFrsquos Ludwigshafen plant
The facility in Germany had already begun supplying TDI in late 2016 before an accident at the 300000 tonneyear plant caused disruptions In late November BASF suspended all TDI production at the facility for an indefinite period due to a technical issue
However in February 2017 BASF unexpectedly announced it will restart TDI production from the site ldquoin a few weeksrdquo It had initially expected to be restart production only in May or June In April a new back-up reactor had been installed at the plant suggesting it was ready to resume production albeit at lower-than-normal rates until a new reactor is installed in 2018
While BASFrsquos Germany-produced TDI cargoes are unlikely to be shipped to Asia they are expected to find their way to the Middle East and Africa where Sadara also hopes to make its mark
In the PMDI market meanwhile the worldrsquos major producer is currently Chinarsquos Wanhua Chemical which has a total production capacity of 18m tonnes annually from its three units Wanhua is also planning TDI production but the start-up date is not known yet
Sadararsquos PMDI production will add an additional 400000 tonnesyear of capacity into the PMDI market
Make no mistake though Sadara is about to enter what is generally accepted as an overcrowded and oversupplied market The key factor at play is that so far in the Middle East there are no major isocyanates producers and so buyers there essentially import almost all their materials from either northeast Asia or Europe
What has essentially kept prices propped up is that Sadararsquos isocyanates production has been repeatedly delayed The Al-Jubail facility is expected to include two isocyanates plants - a 200000 tonneyear TDI unit and the 400000 tonneyear PMDI unit
Output of PMDI is expected to start about the same time as most of its other downstream derivative plants which is estimated to be around mid-2017 TDI production meanwhile is expected by the second half of 2017 at the earliest
About the author
Izham Ahmad is a Market Editor at ICIS and is currently responsible for the isocyanates and polyether polyols markets for the Middle East Izham also covers the Middle East and South Asia markets for linear alkylbenzene (LAB) and the linear alkylbenzene
sulphonate (LAS) as well as the biodiesel and ethanol markets for the Asia-Pacific region
Find out more and download sample reports for
View all available chemical reports including polyolefins ethanol and base oils
Isocyanates (Middle East)
Polyether polyols (Middle East)
Linear alkylbenzene and sulphonate (LABLAS) (AsiaMiddle East)
The Sadara complex will add around 600000 tonneyear of isocyanates to the market
copy Copyright 2017 Reed Business Information Ltd ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report
Page 3 of 3
Middle East Chemicals Market Outlook 2017Currency fluctuations slow downstream demand new supply from China lsquoBrexitrsquo and a Trump Presidency are some of the major factors likely to affect key Middle Eastern commodity markets in 2017
Download our exclusive Middle East Market Outlook magazine for a more detailed and extended review of key commodity markets
Download the outlook at wwwiciscomMEOutlook2017
You can rely on ICIS for all your market intelligence needs
Find out more and download a free sample report
Request a free trial of ICIS news Find out more
Enquire now at wwwiciscomsupply-demand
Subscribe now at wwwicis-subscom
SUPPLY AND DEMAND DATA
Receive an end-to-end perspective across the global petrochemical supply chain enabling you to grasp the local or regional scenario in a global context Data includes import and export volumes consumption plant capacities production and product trade flows ndash from 1978 up to 2030
DIGITAL CHEMICAL BUSINESS MAGAZINE
ICIS Chemical Business (ICB) e-magazine is the No1 source of market intelligence and analysis of the global chemical markets It is the essential reading for global chemical industry players providing decision support for executives making current transactions as well as short term and long term planning
FORECAST REPORTS
ICIS publishes monthly forecast reports for polyethylene and polypropylene in Asia Europe and the US showing a 12-month rolling price forecast as well as details of supply and demand trade balances capacity and margins It is a valuable tool to identify commercial opportunities in the short to mid-term
PRICING INFORMATION
ICIS is the benchmark for independent and reliable price assessments on more than 180 commodities traded in regions such as Asia the Middle East Europe and the Americas Our reports also provide price histories and expert commentary to help you understand the key price drivers and market conditions and settle your contract prices confidently with access to time-sensitive offers bids and price movements
NEWS INFORMATION
Be the first to find out about breaking news and analysis across the global petrochemical markets Our market-moving news articles cover production updates plant capacities output and shutdowns plus so much more
You may also be interested in
copy Copyright 2017 Reed Business Information Ltd ICIS is a member of RBI is part of RELX Group plcICIS accepts no liability for commercial decisions based on the content of this report
Page 3 of 3
Middle East Chemicals Market Outlook 2017Currency fluctuations slow downstream demand new supply from China lsquoBrexitrsquo and a Trump Presidency are some of the major factors likely to affect key Middle Eastern commodity markets in 2017
Download our exclusive Middle East Market Outlook magazine for a more detailed and extended review of key commodity markets
Download the outlook at wwwiciscomMEOutlook2017
You can rely on ICIS for all your market intelligence needs
Find out more and download a free sample report
Request a free trial of ICIS news Find out more
Enquire now at wwwiciscomsupply-demand
Subscribe now at wwwicis-subscom
SUPPLY AND DEMAND DATA
Receive an end-to-end perspective across the global petrochemical supply chain enabling you to grasp the local or regional scenario in a global context Data includes import and export volumes consumption plant capacities production and product trade flows ndash from 1978 up to 2030
DIGITAL CHEMICAL BUSINESS MAGAZINE
ICIS Chemical Business (ICB) e-magazine is the No1 source of market intelligence and analysis of the global chemical markets It is the essential reading for global chemical industry players providing decision support for executives making current transactions as well as short term and long term planning
FORECAST REPORTS
ICIS publishes monthly forecast reports for polyethylene and polypropylene in Asia Europe and the US showing a 12-month rolling price forecast as well as details of supply and demand trade balances capacity and margins It is a valuable tool to identify commercial opportunities in the short to mid-term
PRICING INFORMATION
ICIS is the benchmark for independent and reliable price assessments on more than 180 commodities traded in regions such as Asia the Middle East Europe and the Americas Our reports also provide price histories and expert commentary to help you understand the key price drivers and market conditions and settle your contract prices confidently with access to time-sensitive offers bids and price movements
NEWS INFORMATION
Be the first to find out about breaking news and analysis across the global petrochemical markets Our market-moving news articles cover production updates plant capacities output and shutdowns plus so much more
