Wanhua and Covestro Shut Down: Global TDI Supply Landscape Shifts

A seemingly routine announcement by Wanhua Chemical has sent shockwaves through the global chemical market. On July 21, the company revealed that its Hungarian subsidiary, BorsodChem Zrt., would begin its annual maintenance plan on July 23. As a result, the only TDI production facility in Central and Eastern Europe—with an annual capacity of 250,000 tons—will be shut down for 30 days. Though this is a standard safety production measure, it collided with a critical moment in the global TDI supply chain, instantly becoming a key event shaking the global market.

Europe at the Eye of the Storm

Less than ten days before Wanhua’s announcement, a sudden electrical fire hit chemical giant Covestro’s core facility in Dormagen, Germany. The blaze destroyed production lines for 448,000 tons/year of caustic soda and 480,000 tons/year of chlorine. On July 16, the accident triggered a disastrous chain reaction—Europe’s largest TDI monomer plant (300,000 tons/year), which relies on those key raw materials, declared force majeure. Covestro admitted it could not offset the supply gap in the short term via other facilities or external purchases, and the restart timeline remains uncertain. Europe’s two major TDI bases were thus simultaneously brought to a halt, dramatically tightening regional supply.

Asian Maintenance Adds Fuel to the Fire

As Europe plunges into a supply crisis, major Asian producers are undergoing peak maintenance periods. Wanhua Chemical’s 360,000-ton/year TDI facility in Fujian has been under a 45-day maintenance cycle since June 5, while its Xinjiang plant is also undergoing annual maintenance. Another key domestic producer, HeShan Juli, shut down on July 15 for 33 days, and other companies like Gansu Yinguang plan to follow by the end of the month. The combined suspension of three major units affects 710,000 tons of capacity—43.3% of China’s total. Notably, Japan’s Mitsui Chemicals has announced it will permanently reduce its 120,000-ton/year Omuta plant’s capacity to 50,000 tons/year starting May 2025, further weakening Asia’s supply flexibility.

Price Surge Highlights Industry Imbalance

The compounded supply disruptions have triggered a market storm. Domestic TDI prices surged sharply, with the market average reaching ￥15,900/ton on July 21—up ￥1,012 in a single day, a 6.79% increase, marking five consecutive days of gains. Spot prices soared even higher, jumping 9.22% in one day to ￥15,000/ton. The monthly increase exceeded 31.2%, setting a rare record in recent years. This supply squeeze, driven by both accidents and planned maintenance, has brought much-needed relief to an industry mired in a two-and-a-half-year price slump.

TDI Price Index - Image source: Business analytiq

China Takes Up the Global Baton

With European capacity nearly wiped out and Asian supply tightening, the global TDI supply map is undergoing a historic transformation. Out of the global total capacity of 3.367 million tons, China accounts for 1.64 million tons—or 48.7%—becoming the industry’s stabilizing force. Only four major domestic facilities remain in stable operation: Wanhua Chemical’s Yantai base (300,000 tons), Covestro’s Shanghai plant (310,000 tons), BASF’s Shanghai unit (160,000 tons), and Cangzhou Dahua (160,000 tons). These running units are now the lifeline of the global TDI supply chain.

The burden of China’s production capacity is rapidly increasing amid the crisis. From January to May 2025, China’s net TDI exports reached 220,000 tons—a year-on-year surge of 97%—mainly flowing to emerging markets like Vietnam, Turkey, Indonesia, and India. As the international supply gap widens, China's TDI export growth is expected to reach new highs. The secondary market has already caught wind of this trend: share prices of industry leaders such as Wanhua Chemical and Cangzhou Dahua have soared for consecutive days. Despite emergency statements clarifying no undisclosed major developments, market optimism about a cyclical rebound in the sector remains strong.

Conclusion

This supply-driven price rally may offer a temporary breather for enterprises, but sustainable recovery in the industry remains uncertain. TDI's downstream applications are heavily concentrated in flexible polyurethane foam (73%) and coatings (17%), deeply tied to end markets such as furniture, automotive, and construction. In the short term, domestic consumption stimulus policies like "old-for-new" exchanges and expanding export markets provide solid demand support.

However, structural issues persist. As halted facilities gradually resume operations, the threat of global overcapacity will likely return. The industry urgently needs to upgrade technologies to expand into high-end applications, develop eco-friendly coatings and specialty elastomers, and build more flexible capacity adjustment mechanisms. This unexpected global supply chain disruption not only underscores China's strategic role in key chemical materials but also delivers a deeper warning: after the short-term price frenzy fades, building a new industrial ecosystem that balances efficiency and resilience is the only path to long-term stability.