The TDI market is experiencing supply disruptions, but prices are still watching demand closely.

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This is the ISOL Trend Analysis Team.

The perspective on the global TDI market is complex. On one hand, there are clear signals that "supply has decreased," while on the other hand, questions arise such as "Can prices really rise easily?" Currently, the market appears to be in a typical tug-of-war phase where supply and demand are pulling in different directions.

Looking at the supply-side variables, this cycle cannot be explained by just one or two equipment issues. From late 2025 to early 2026, key production facilities in the global TDI market were continuously affected in a relatively short period. Wanhua Chemical's Fujian TDI facility unexpectedly halted temporary operations in mid-December 2025, leading to an immediate reduction in quarterly supply during that period. Subsequently, the large TDI facility of Covestro in Shanghai began regular maintenance from early December, and the market started to feel a noticeable decrease in volume.

In January 2026, the situation became even more complicated. The TDI facility in Wanhua Chemical's Xinjiang region went into a short-term shutdown, and around the same time, Hanwha's TDI facility in South Korea also entered a temporary halt due to raw material supply issues. These facilities are not minor players in the global market; they are core production sources that can significantly impact actual volume flows, which quickly heightened market tension.

As several major companies' facilities are simultaneously affected, there are clearly tight signals on the supply side. In fact, major global producers have continuously announced price increases since December 2025, and in some regions, there have also been movements to adjust volumes or limit supply. It is hard to deny that supply instability is serving as a justification for price increases.

However, the market's focus naturally shifts to demand. TDI is primarily used in soft polyurethane foam, and demand arises in industries closely linked to consumer goods such as furniture cushions, mattresses, and automotive seats. In other words, it is more directly influenced by consumer sentiment and the manufacturing sector's perceived economy than by the construction market.

Currently, it is difficult to view this demand environment as strong. With high interest rates persisting globally, consumption of furniture and interior materials is still recovering slowly, and the automotive industry is not in a phase of rapidly increasing volumes. Therefore, for downstream companies, even if raw material prices rise, it is not easy to pass these costs directly onto product prices.

The ISOL Trend Analysis Team sees this point as central to the current TDI market. While supply instability clearly supports the downside of prices, it seems difficult for prices to continue rising without strong demand backing them up. In fact, in some regions, after price increase announcements, transactions have not immediately followed suit, but rather cautious movements focused on short-term contracts have been observed.

Another point to note is that the global TDI supply structure is increasingly being restructured around China. While production capacity is being reduced overseas due to energy costs and environmental regulations, China has been expanding its share of global supply centered around large facilities. This could enhance supply stability in the medium to long term, but it also means that the impact of demand conditions, inventory policies, and restart speeds within China on global prices has become much greater than in the past.

Ultimately, the current TDI market is close to a structure where "supply creates the floor for prices, and demand limits the ceiling." Rather than determining the direction based solely on short-term facility issues, it seems necessary to monitor the timing of the normalization of key facilities along with the actual recovery of demand in downstream industries such as furniture and automobiles.