200,000 Tons! Industry Giant Announces MDI Capacity Expansion
On October 23, 2024, Mitsui Chemicals announced on its official website that its joint venture, Kumho Mitsui Chemicals in South Korea, has begun commercial operation of its newly expanded diphenylmethane diisocyanate (MDI) production facility as of the end of September.
Project Overview
The project, originally scheduled to start construction in April 2021, complete in September 2023, and begin operation in January 2024, involved a total investment of 40 billion yen. The expansion increases the facility‘s production capacity from 410,000 tons/year to 610,000 tons/year.
Reasons for Expansion
According to Mitsui Chemicals, the capacity expansion is driven by two main factors:
1. Rising Demand for High-Performance MDI: The demand for high-performance MDI used in insulation materials and NVH (noise, vibration, and harshness) control for electric vehicles is growing rapidly.
2. Kumho Mitsui Chemicals‘ Global Ambitions: The company aims to become a leading global MDI producer. With advanced equipment from the expansion, Mitsui Chemicals plans to further develop its MDI business and enhance its functionality.
Additionally, Kumho Mitsui Chemicals has introduced recycling facilities as part of the expansion. These facilities allow for the reuse of by-products as raw materials, reducing costs, wastewater, and greenhouse gas emissions.
About Kumho Mitsui Chemicals
Established in 1989 as a joint venture between Mitsui Chemicals, Inc. and Kumho Petrochemical Co., Ltd., Kumho Mitsui Chemicals is headquartered in Seoul, South Korea, with its MDI production facility located in Yeosu.
The company‘s primary business focuses on the production and sale of MDI, including:
– High-performance MDI (monomeric and modified MDI) used in automotive parts, elastic fibers, and synthetic leather.
– General-purpose polymeric MDI used in insulation materials.
MDI Market Dynamics
With global MDI production capacity highly concentrated, Kumho Mitsui Chemicals‘ expansion elevates it to the sixth-largest producer, surpassing Japan‘s Tosoh Corporation (470,000 tons/year). The top five producers are:
1. Wanhua Chemical: 3.5 million tons/year.
2. BASF: 1.89 million tons/year.
3. Covestro: 1.77 million tons/year.
4. Huntsman: 1.37 million tons/year.
5. Dow: 1.11 million tons/year.
Wanhua Chemical alone commands over 30% of the global market.
In early September, Wanhua Chemical‘s MDI facilities in Yantai (1.1 million tons/year) and its subsidiary BorsodChem in Hungary (400,000 tons/year) underwent maintenance but have since resumed normal production. Meanwhile, unexpected shutdowns or force majeure events at international MDI facilities have created supply gaps, disrupting market stability and driving up prices.
China‘s MDI Export Surge
China‘s MDI exports reached 722,400 tons in the first seven months of 2024, a 5.5% year-on-year increase, underscoring strong international demand for Chinese MDI products. Projections suggest that by 2028, China‘s MDI exports will grow to approximately 1.3 million tons, with imports dropping below 300,000 tons, leading to a net export volume of 1 million tons.
As of September, the price of polymeric MDI rose from 17,300 yuan/ton at the beginning of the month to 18,116.67 yuan/ton by the end of September. In the East China market, prices have continued to climb, currently reaching 18,500 yuan/ton.
MDI Applications
MDI is a key raw material for polyurethane production, used across various fields such as:
– Automotive components.
– Insulation materials for homes and refrigerators.
– Adhesives.
In China, refrigerators and freezers represent the largest downstream demand for polymeric MDI, accounting for over 50% of consumption in 2023. Adhesives make up approximately 19%, followed by automotive applications at 5%, with other sectors collectively accounting for less than 5%.
Market Outlook
The MDI industry exhibits a tight balance between supply and demand. In 2023, China‘s polymeric MDI production reached 1.9 million tons, while demand was 2.377 million tons.
Looking forward, MDI demand is expected to grow at an annual rate of 6%, driven by:
– Global Warming Mitigation Policies: Policies promoting improved insulation performance in residential and commercial buildings.
– Economic Growth: Increasing consumer demand for enhanced comfort and quality of life.