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Polyurethane Market Quarterly News Report (20120101-20120331)

"According to a latest Polyurethane market report, it is said that global

Polyurethane products sales volume reached 40.6 billion dollars in 2011

and will achieve 57.4 billion dollars by 2016 with the compound annual

growth rate at 7.2% from 2012 to 2016..."

Tel: 021-61159285Fax: 021-61159277Email: [email protected]: www.pudaily.com

Contents

"At that time, Asia-Pacific is made the largest market, followed by Europe.

Asia-Pacific leads Polyurethane output and consumption in the world. As

a newly emerging market in global Polyurethane industry, Asia-Pacific

has witnessed furious competition in recent years..."

www.pudaily.com Your Trusted PU Market Adviser January-March 2012

Global Polyurethane Market• Growth inMideastPolyols, Isocyanates toBeStrong(2012-1-5)

Growth in the Middle East toluene di-isocyanate

(TDI) and methyl di-p-phenylene isocyanate

(MDI) sectors is expected to be robust in 2012 because

of the region's rapidly expanding infrastructure and

population, market players said.

Most industry players added that they expect

growth in the region’s TDI and MDI sectors to be at 5-6%

annually until 2015.Others have higher expectations of

about 10% annual growth, but on the condition that the

Arab Spring ends soon.

Given the growing population in

the Middle East, housing projects

are also set to multiply and those

will require rigid foam for insulation.

Consequently, this will boost the

demand for flexible foam in the

furniture and bedding sector. In

addition, the growth in the Middle

East’s population will translate to

more vehicles on the road.

The expectation of strong downstream demand

for both flexible and rigid foams comes as good news

to European and Asian isocyanate and polyol makers,

as the Middle East is a net importer of those two

feedstocks. Furthermore, there are no additional TDI

and MDI capacities scheduled to come on stream

in Europe and Asia this year, so that should help to

underpin prices, said players.

Meanwhile, Asian MDI and TDI prices are expected

to be supported by restocking activities after the

Lunar New Year holiday on 22-28 January and this in

turn is expected to underpin prices in the Middle East as

the region’s prices move in tandem with the key China

market.

"If demand from China improves after they return

from the Lunar New Year holiday, [TDI and MDI] prices

will continue on its uptrend,” a European producer said.

However, some market players cautioned that any price

gains this year will be capped as supply may become

long again.

• HuntsmanAcquiresTurkishPolyurethanesSystemsHouse(2012-1-5)

Huntsman Corporation

announced that it has

acquired EMA Kimya Sistemleri

Sanayi ve Ticaret A.S., an MDI-

based polyurethanes systems house

in Istanbul, Turkey. As a result of

the deal, EMA will become part of

Huntsman’s Polyurethanes division and will be known

as Huntsman-EMA. EMAs’ two major shareholders, Mrs

Gulum Kabil and Mr Engin Tataroğlu, will continue to

manage the business operations of the new venture.

EMA’s plant was built in 2006 to produce

polyurethane blends for Turkey's fast-growing MDI

systems market. Today, the facilities have capacity for

system blending, polyester polyols manufacture and

bulk MDI and base polyols storage.

• SCG-DOWGroupAchievesSuccessfulThailandHPPOPlantStart-up(2012-1-5)

The Dow Chemical Company (NYSE:Dow) announced today that the SCG-Dow Group, a joint venture between

Dow and Siam Cement Group, has finalized the start-up of its new propylene oxide (PO) facility in Thailand by

successfully completing its full capacity performance test.

Dow reached a key milestone in October 2011 when the plant achieved stable production levels in preparation for

the full capacity run scheduled for the fourth quarter of 2011. The new facility met that target on time by successfully

completing the full capacity run on November 22, 2011 – only two months after starting raw material feeds to this new

plant. Additionally, the plant exceeded expectations for all quality and yield performance parameters.


Global Polyurethane MarketThe world-scale plant, located within the Asia Industrial Estates

(AIE) site near Map Ta Phut, Thailand, has a name plate capacity

of 390 kilotons per annum (KTA) of PO via the innovative hydrogen

peroxide to propylene oxide (HPPO) technology.

"The successful start-up of this environmentally advanced and

complex technology shows the innovation power, project execution and operational strength of Dow,” said Holger

Baer, global manufacturing and technology director, Dow Propylene Oxide/Propylene Glycol.

"Dow’s investment in this new facility strategically enhances its existing position as the global capacity leader in PO

and better positions its derivative businesses such as Polyurethanes and Propylene Glycol,” said Steven English, global

vice president, Dow Polyurethanes. “As a global strategic source point, Dow can better serve customers of these life-

enhancing industries in Asia and beyond.”

"Despite some anticipated challenges, the commitment of people from various functions has delivered a successful

project. This HPPO plant will add value to propylene from the joint venture cracker in Thailand,” said Cholanat

Yanaranop, President of SCG Chemicals Company Limited.

• POPricesLessBullishonWorriesofWeakerDemand(2012-1-11)

Market part ic ipants in As ia are toning

down their bullish first-quarter forecasts

for propylene oxide (PO) because of the uncertain

macroeconomic outlook and worries about oversupply

and weaker demand from China, the region’s largest PO

consuming nation.

Market players originally expected total PO demand

in China to grow to above 2.2m tonnes in 2012, up from

around 1.85m tonnes in 2011.

However, Asia’s demand for PO is expected to

drop because global economies are still grappling with

substantial downside risks such as laggin GDP growth

momentum as well as low business and consumer

confidence, while China is still maintaining a prudent

monetary policy, despite a recent cut in its bank reserve

requirement ratio.

In addition, the tight supply conditions seen in

2011 have eased as operations at key facilities resumed

and commercial production at new PO plants, including

Dow Chemical’s 390,000 tonne/year PO unit in Thailand

have started successfully.

The increase in supply exerted downward pressure

on the spot PO market, causing prices to fall by as much

as $400/tonne (€312/tonne) within weeks in December

2011, ICIS data showed.

In December, PO prices dropped to a one-year low

of $1,500/tonne CFR China, according to ICIS data,

narrowly breaching what market players said was the

breakeven level for many producers, before rebounding

to around $1,600/tonne in end-2011 on the back of pre-

holiday restocking activity.


Global Polyurethane Market• BASFandSinopecInaugurateUS$1.4blnSecondPhaseofNanjingIntegratedPetrochemicalSite(2012-1-13)

BASF-YPC Co., Ltd. is a 50-50 joint venture between BASF

and Sinopec, founded in 2000 with a total investment

of US$2.9 bln in the first phase. Located in Nanjing, Jiangsu

Province, it produces chemicals and polymers for the Chinese

market.

"Through this successful partnership, we are able to

bring vital chemical products and solutions to China that will

directly support local industries as they strive to meet the needs of a rapidly developing population,” said Dr. Martin

Brudermüller, Vice Chairman of the Board of Executive Directors of BASF SE, responsible for Asia Pacific.

• EvoniktoSetUpChengduBranchinChina(2012-1-17)

Evonik announced that it will open a new branch

in Chengdu, Sichuan province in the first quarter

of 2012. The new branch will be located at Yanlord

Landmark in the heart of Chengdu's central business

area.

Developing the west is a matter of vital importance

in China’s 12th Five-Year Plan. With the implementation

of the government’s ambitious strategy, Chengdu is

gradually playing a leading role in the development of

the western region in China. This move of Evonik will

expand the company’s presence in China and enable

Evonik to further explore growth opportunities in this

region.

"Chengdu has become the economic and financial

hub of West China and already has a complete

chemical value chain. It therefore attracts international

companies to set up branch offices here.” said Dr. Hans-

Josef Ritzert, Regional President Greater China of Evonik

Industries, "With our new branch in Chengdu, we will

tap more business potential opportunities in western

China. Our local presence will also benefit the existing

customers in this area. We will be able to support them

with faster and more responsive services."

A team that consists of members from all business

units of the company will start to work in the new

Chengdu branch from this year. The team will focus

on providing solutions based on Evonik’s entire product

portfolio mainly in the area of automotive, electronics,

coatings, feed, health care and construction industries.

The company also plans to increase the staff number

along with the business expansion in western China in

the future.

• BASFtoSet-upProductionPlantforTDI&ExpansionofExistingPlantsatLudwigshafen(2012-1-20)

BASF has recently announced that it will build

a single-train 300,000 metric tons per year

production plant for TDI (toluene diisocyanate) and

expand additional plants for its precursors at its site

in Ludwigshafen. These include the construction of a

new hydrogen chloride recycling plant as well as the

expansion of plants for nitric acid, chlorine and synthesis

gas. It is also planned to expand the aromatics complex

at the site for the supply of toluene. Total investment

including the required infrastructure at Ludwigshafen site

will be about €1 billion and create around 200 additional

jobs. Production will start at the end of 2014. BASF

plans to close down its 80,000 metric tons per year TDI

production plant in Schwarzheide, Germany, when the


Global Polyurethane Marketnew plant goes on stream. TDI is a key component mainly used for flexible polyurethane foams.

"This project will position us as the low-cost TDI producer in Europe due to economies of scale and the highly

efficient integration into our Verbund," said Wayne T. Smith, President of BASF's Polyurethanes division. " Building

our new TDI plant at our largest Verbund site in

Ludwigshafen gives us the advantage of the excellent

production synergies, raw material integration and

logistics. Together with our existing TDI sites in Asia

and North America we will be able to optimally

serve customers in al l major markets"."We are

constantly developing the Ludwigshafen site further

to remain competit ive i n t e r n a t i o n a l l y . I n

a d d i t i o n t o s u c h important investments in

production, this involves m o d e r n i z a t i o n a n d

targeted development of the whole infrastructure,"

said Dr. Bernhard Nick, Site Manager of the BASF

Ludwigshafen Verbund site. "The new TDI plant and the related facilities strengthen the competitiveness of BASF's

largest Verbund site". Associated investments in precursors and infrastructure will support additional growth in other

BASF value chains.

At Schwarzheide, BASF will develop its site structures according to the future needs over the next years to focus

more on specialties. With the investment BASF will have two strong sites in Europe for polyurethane basic products:

Ludwigshafen for the production of TDI and Antwerp for the production of MDI (diphenylmethane diisocyanate) and

propylene oxide.

• EuropeFebPolyolPricesRiseonHigherCosts,MarginRecovery(2012-2-10)

European polyo l contract

prices have been driven up in

February by intensified cost pressure

and the need for margin recovery,

market players said on Wednesday. A

few producers said they had secured

hikes of €100-150/tonne, but this

was reflective of combined increases

for January and February rather

than February only and there was

insufficient market confirmation to

substantiate this. By contrast, one

buyer said it had secured a rollover

in its flexible polyol price, stating

that its increase is postponed to

March amid intensified competition

between suppliers. However, this was

seen to reflect an exception rather

than the norm.

Downsteam demand into the

bedding and furn i ture sectors

remains reasonable-to-good, despite

underlying economic uncertainty.

However, some players are mindful

that polyol demand could be limited,

if the succession of production

problems for TDI continue. This

i s b e ca u s e T D I i s t h e f l ex i b l e

counterpart, used with polyols in

foam manufacturing.

The flexible polyols market

is balanced-to-tight, depending

on source. Some sug gest that

polyols supply is limited because of

some weather-related production

constraints and the prioritisation

of upstream propylene oxide (PO)

into downstream monopropylene

glycol, rather than the polyol sector.

The latter is attributed to increased

demand for de-icer and antifreeze

due to the cold temperatures and

snow across Europe. However, other

players said that supply remains

sufficient and they have not


Global Polyurethane Market

• BASFTDIAllocation(2012-2-17)

Effective immediately, BASF is currently announcing an 80% allocation on toluene diisocyanate (TDI) based on the

average of the previous six months purchases. We expect this allocation to be in effect through March 2012 due to

the verbund turnaround taking place in Geismar, Louisiana.

Your Account Manager will provide details of this allocation and is available to answer any questions you may have.

We apologize for this allocation and appreciate your continued support of BASF Urethane Chemicals.

• Mideast/AfricaTDIPricestoStayFirminMarchonShortSupply(2012-2-27)

Middle East and African toluene di-isocyanate (TDI)

spot prices will continue to rise in March because

of tight supply and high upstream benzene costs,

industry players said on Friday.

The shortfall in TDI availability in the Middle East

and Africa, which are import dependent regions, is a

result of ongoing outages or turnarounds and a series of

forthcoming scheduled shutdowns globally, they added.

Consequently, TDI prices in the Middle East are

currently the second highest after the US. Most players

are confident that the price uptrend will continue in the

Germany-based BASF said on

Tuesday it is on schedule to

begin a 30-day turnaround at its Geismar,

Louisiana, complex on Wednesday.The

company first confirmed the plans back

in January.

B A S F w i l l p e r fo r m p r e v e n t i v e

maintenance and equipment inspections

and will install new equipment, the

company has said. Many of the site’s

plants will be shut down during the

turnaround. The last similar turnaround

at the Ge ismar s i te was in 2008,

according to the company.

The complex includes units that

produce 290,000 tonnes/year of methyl

d i -p -pheny lene (MDI) ; 160,000

tonnes/year of toluene di-isocyanate

(TDI); and 135,000 tonnes/year of

butanediol (BDO), according to ICIS

plants and projects.The site also produces

160,000 tonnes/year of hydrochloric acid

(HCl) as a by-product of its isocyanates

production.

TDI consumers are not expecting

any disruptions. Sources said BASF’s and

processors’ inventories are sufficient to

supply requirements for polyurethane

(PU) production during the shutdown.

US BDO sources have said consumers

probably will not see any disruptions in

filling first-quarter BDO contract from

BASF.

e x p e r i e n c e d a n y

production problems.

Monthly rigid polyol

prices have moved up

to t h e m i d - to - u p p e r

€1 ,900s/tonne FD in

February for the same

cost reasons as for its

f lex ib le counterpart .

There were suggestions

of larger increases and

pr ices up to €2,000/

tonne, but they were not

widely confirmed. There

was also talk of prices

below the range, but this

was not seen to reflect

the general market level.

• BASFtoStart30-DayTurnaroundatLouisianaComplexonWednesday(2012-2-15)


Global Polyurethane Marketsecond quarter, with offers already

surpassing $3,000/tonne CFR Middle East/

Africa this week.

Half of the TDI producers based in Asia

and Europe said they are unable to offer

any spot March or April material to the

Middle East because of plant shutdowns in

their region, so that has further tightened

supply.

BASF and Bayer MaterialScience are

short of March and April spot shipments,

with one producer’s supply likely to remain

tight until June, sources close to the two

companies said.

In addition, Japan’s Mitsui Chemicals

has already sold out its March allocations,

while Perstop and Borsodchem are still

clearing their February backlogs and are

uncertain about how much spot material

they will make available for sale for March,

company sources said.

A Dubai-based trader said it seems like

there is no spot availability, as cargoes being

offered are less half of their usual volume.

The short supply in South America has also

squeezed availability in the Middle East

and Africa tighter, industry players said.

The tight supply has caused prices

to rise despite the fact that demand is

moderate, market players said. A European

trader added that there are few offers for

European product in the African market,

but their customers are mostly covered

even until April.

• ShellAnnouncesPolyolIncreaseProduct Effective Date Price Rise

Caradol® Polyols February 1 $0.08/lbMay 1 $0.08/lb

• DowPriceActionforTDI,MDIandPolyolsintheUnitedStates

Product Effective Date Price Rise

VORANATE™ TDI February 17 $0.10/lbMarch 1 $0.10/lb

March 15 $0.05/lbBefore March 30 $0.15/lb

PAPI™, ISONATE™, and ISOBIND™ MDI March 1 $0.10/lbFlexible VORANOL™, VORALUX™, and

SPECFLEX™ polyolsFebruary 17 $0.10/lb

March 1 $0.15/lbMarch 29 $0.10/lb

•USPolyols,IsocyanatesPricesRiseonFeedstocks,Supply/Demand(2012-3-6)

Prices of polyols and isocyanates

in the US are rising because of

tightening product availability and increasing feedstock costs amid

strengthening demand, a major US

supplier said on Monday.

Buyers have signalled little

resistance to the increases

announced by several US suppliers as consumers were more concerned

about obtaining sufficient product.

The supplier said it had announced price increases for toluene

di-isocyanate (TDI) of 10 cents/lb ($220/tonne, €167/tonne) for 17

February, 10 cents/lb for 1 March and 5 cents/lb for 15 March.

The same supplier announced price increases for flexible polyether

polyols at 10 cents/lb for 17 February. Other initiatives for were at 10

cents/lb for flexible polyether polyols for 1 March and at 15 cents/lb for

copolymer or graph polyols for 1 March.

An additional 10 cent/lb increase on all polyols was scheduled for

29 March, according to the supplier. The supplier said the increases are

being implemented as announced, driven by short availability of TDI,

rising cost of MDI feedstock benzene, and tight supply of polyols.

Low inventories at year-end and strong demand from polyurethane

consuming sectors such as automotive, furniture and bedding, and

construction are contributing to market tightness and support rising

prices.


Global Polyurethane MarketTDI availability of remains tight because of allocations announced by two US producers. BASF announced

an 80% allocation on TDI because of a 30-day planned maintenance turnaround at its Geismar, Louisiana, complex

that started on 15 February. Bayer MaterialScience is maintaining a temporary 90% allocation because of reduced

inventories.

Major US polyols and/or isocyanates producers are BASF, Bayer MaterialScience, Dow Chemical and Huntsman.

• MitsuitoCloseChibaPPGPlant(2012-3-16)

• GermanyPushesAheadWithMajorTDIExpansionsDespiteAnUncertainMarket(2012-3-20)

The large local producers BASF and Bayer MaterialScience (BMS) both have established isocyanate production sites

in the country, and also have smaller, older TDI units there. They could benefit from replacing the smaller units

with newer, larger, more cost-effcient ones.

As part of BMS's TDI new capacity and restructuring project, the firm plans to build a €150m ($200m)

Mitsui Chemicals, Inc. and

S a u d i B a s i c I n d u s t r i e s

Corporation (SABIC) announced

a L i c e n s e A g r e e m e n t f o r

manufacturing technology of TDI and

MDI, feedstock for polyurethane, and

to study further possible business

alliances. In light of this agreement,

Mitsui Chemicals will restructure

its polyurethane business. Mitsui

Chemicals will study further business

all iances in polyurethanes with

SABIC. SABIC will commence front

end engineering and design (FEED) of

its competitive world-scale, cutting

edge TDI/MDI plant using Mitsui

Chemicals' proprietary technology.

Mitsui Chemicals will study further

possible business alliances with

SABIC in terms of business strategy as

well as economical feasibility, which

may include forming a joint venture

company and conclude a concrete

alliance plan in 2013 after the FEED

has been completed by SABIC.

J a p a n e s e d e m a n d f o r

polypropylene glycol (PPG), a raw

material of polyurethane, is expected

to drop gradually over the mid to

long-term. Mitsui Chemicals has

decided to terminate production

of PPG by June 2012 at Ch iba

Polyol Corporation, its 90% owned

subsidiary, where approximately

28,000 tons are produced annually.

T h e C o m p a n y w i l l c o n t i n u e

production at its two other PPG

production sites in Japan (Nagoya

Wo r k s a n d To k u y a m a B ra n c h

Factory). The Company wil l cut

costs and reinforce profitability by

improvement of operational rate and

other production rationalization.

Mitsu i Chemica l s current ly

produce TDI and MDI at factories

in Japan and also at Kumho Mitsui

Chemicals, Inc. in South Korea. The

company will optimize its production

of TDI and MDI at existing facilities

and the new facilities in Saudi Arabia.

It is expected that those overseas

facilities will become the main supply

bases of Mitsui Chemicals. Mitsui

Chemicals will continue to strengthen

its coating and engineering material

operations, one of the five priority

businesses in the Mid-Term Business

Plan, by measures including strategic

overseas investments. Domestic

sites, mainly Omuta Works and

Kashima Works, have been making

accelerated efforts to implement the

cost reduction program targeting

cost cuts of 8 billion yen by FY2015 (in

comparison with 2010) and recently

executed reduction in depreciation

costs due to impairment loss for

fixed assets. The cost reduction plan

is expected to be attained with the

amount of 3 billion yen in 2011.


Global Polyurethane Market300,000 tonne/year TDI facility at Dormagen, Germany, and replace its existing TDI and pilot plants on site, which

have combined capacities of 90,000 tonnes/year.

BMS also plans to convert its 125,000 tonne/year TDI unit at Brunsbuettel, Germany into a 220,000 tonne/year

methyl di-p-phenylene isocyanate (MDI) facility. On February 22, 2012, BMS said it received authority approval to start

building its TDI facility in Dormagen. The company had announced its TDI capacity plans in March 2010 and applied for

regulatory building approval in April 2011.

BASF's plans to make a new €1bn investment in a 300,000 tonne/year single train TDI unit and new TDI precursor

units at its main Ludwigshafen production site, in Germany. This expansion will also mark the end of its 80,000 tonne/

year TDI unit at Schwarzheide, Germany. The firm plans to develop its Schwarzheide site to focus on specialty products.

• WanhuaInternational(India)SetsUpinMumbai(2012-3-21)

As one of major rising economic powers in the world, India has

witnessed rapid growth of its polyurethane industry with the

output of 320000 tons in 2011. In next few years, the figure will

increase 15% annually. Recently, Wanhua International (India) is

established in Mumbai with 10 million rupees, engaged in import

and export of chemicals.

• GlobalTDIMarkettoReachUS$8Blnin2016,atAnEstimatedCAGRof5.5%(2012-3-23)

• BASFExpandsinIndonesiaWithNewPolyurethanesLaboratories(2012-3-30)

ASF, the world’s leading chemical company, has launched new laboratories for Polyurethanes (PU) at its Cimanggis

site in Indonesia. This expansion will further strengthen the company’s technical service network in the ASEAN

region.

Housed in the BASF Technical Service Center at Cimanggis, the new laboratories are designed to enhance the

TDI (Toluenediisocyanate) is mostly used to

manufacture flexible polyurethane foams which

are primarily used as cushioning material in furniture

and transportation applications. It is mainly used in beds

and car seats and to some extent in manufacturing rigid

foams, coatings, adhesives &sealants, and elastomers.

The global TDI revenue is expected to reach at USD

8 billion in 2016 with an estimated CAGR of 5.5% from

2011 to 2016, as per transparencymarketresearch.com.

Positive volume growth is expected into the global TDI

market at a CAGR of 4.8% from 2011 to 2016 due to

the rise in demand from developing economies such as

India and China in Asia Pacific.

Flexible PU foams are the largest TDI application

market that accounted for 85.2% of the Toluene

diisocyanate market revenue in 2011. The flexible foams

segment is expected to grow with a CAGR of 5.6%

during 2011 – 2016.

The Asia Pacific is the fastest growing regional

market, which is expected to reach US$3 bln in 2016

with a CAGR of 6.8% during 2011 – 2016. The Asia

Pacific TDI market is expected to have a volume share

of 39% of the global TDI market in 2016. Continuous

rise in TDI bulk price is observed since January 2009 on

account of rise in feedstock (Toluene) costs and rise in

crude oil prices.


Global Polyurethane Marketquality and efficiency of technical services, including

the analysis of polyurethane system performance, reactivity

and physical foam testing. BASF’s application engineers

can provide customized solutions by adjusting the system

formulation to meet specific needs, thereby saving customers

time and money.

"Indonesia, already the largest economy in Southeast Asia,

needs the right innovative materials and solutions to support

its continued growth,” said Henry Choo, President Director,

PT BASF Indonesia. "Polyurethanes are a crucial for products

such as shoes, energy efficient refrigerators and building insulation materials, cars and motorcycles. With these new

laboratories, we will be able to offer fast, local support and stay closer to customers, to help them address industry

challenges such as the need for better production efficiency and more environmentally-friendly solutions.”

"The world of polyurethane systems is highly service-oriented and depends heavily on the expertise and

competence of its service providers. As a global leader in polyurethanes, we enable customers in every part of the

world to have access to the technical support and service they need to optimize their product applications," said Mr.

HyoungSoon Moon, Vice President of Polyurethanes in Asia Pacific. "The new technical laboratory allows us to serve

local customers with comprehensive, tailored PU solutions through a reliable, single global supplier. The strong growth

and demand in this region has provided us with compelling reasons to invest in the technical facilities and experts

in this area. These investments will help to boost the ASEAN region into one of the fastest-growing markets in the

polyurethane industry within the next decade."

2012 China Polyurethane and Emerging Industries Development & Investment Forum

THE HIGHLIGHTS 1-day International Conference Speakers, enomists, business & government leaders Independent speeches, high-level dialogues, project promotion

For Invitation Letter

30 August 2012 Shanghai Galaxy Hotel

888 West Zhongshan Road, Changning District, Shanghai

http://www.pudaily.com/staticpage/page20120720/2012_China_Polyurethane_and_Emerging_Industries_Development_and_Investment_Forum.pdf



China Polyurethane Market• NewChineseBDOPlantScheduledfor2012Startup(2012-1-11)

GBL tower crane project of China’s Sinopec Yizheng Chemical Fibre Co‘s 100,000 tonne/year 1,4-butanediol (BDO)

plant which would produce 50,000 tonnes/year of BDO, 35,800 tonnes/year of tetrahydrofuran and 4,900

tonnes/year of gamma-butyrolactone is finished. The plant, which was started this early year , is still under smooth

construction and to come on stream by third quater in 2012.

After quintic argumentation of headquarters, Sinopec Yizheng finally adopted the n-butane routing and it signed

the contract about technology introduction with Davy Process Technology on March 12, 2010. The BDO project is

constructed by China Nuclear Industry Huayu Engineering Company.

• ChinaPolyetherPolyolsin2011:ConsumptionGrowthSlowsDown;ExportsVolumeGreatlyRises(2012-1-29)

As analyzed by Pudaily, the total consumption

a m o u nt o f va r i o u s k i n d s o f Po l ye t h e r

Polyols(including POP) exceeds 1.7 million tons. In

details, Elastomer Polyols, Polyether Polyols for Rigid

Foam and POP performs better than other grades in

2011. Meanwhile, HR Polyols consumption growth

slows down remarkably.

T h o u g h

Polyether Polyols

c o n s u m p t i o n

growth rate returns

to less than 10%,

domestic faci l i ty

c a p a c i t y a n d

production has seen

a big increase. Due

to efficient supply within China, imports of Polyether

Polyols decrease by 20% and exports volume rises by

about 40%, as assessed by Pudaily.

• CrudeMDIPriceSeemsHardtoIncrease(2012-2-9)

After the Spring Festival, players come back to the

market early while the downstream factories will

not start production until the Lantern Festival. At that

time, the Crude MDI business is unsatisfactory. Most

traders still hold firm quotations but a few people

quote lower in order to attract customers. After the

Lantern Festival, inquiries from customers are more

than before. The spot market turns active and

some traders gradually have the intention to boost up

quotations.

At the beginning of February, suppliers raise Crude

MDI list prices successively. It has been the third time

for MDI price rise since last November, which places

downstream clients in an unfavorable situation. And

traders also become more prudent about trading.

Meanwhi le, in the downstream sector, the

household appliances industry is greatly influenced

as policies concerned are abolished step by step.

According to market insiders, the prospect of household

appliances industry in 2012 may not be all roses. As for

panel industry, manufacturers maintain low operating

rates.

As opined by PUdai ly consultants , despi te

manufacturers’ efforts to push up quotations, the Crude

MDI price is not likely to rise significantly in February.

• AsianBDOtoRiseFurtheronFirmChinaMarket,ShortSupply(2012-2-15)

Asia’s butanediol (BDO) prices are expected to

strengthen in the coming weeks in line with the

firming prices in China on higher feedstock costs, active

restocking following the Lunar New Year holiday and

tightened regional supply, producers and traders said

on Tuesday. The Chinese BDO prices have increased by

$100-150/tonne (€76-114/tonne), or 4.2-6.3%.


China Polyurethane MarketA Chinese trader said several of its key customers urgently require

BDO cargoes for delivery at the end of February and early March and as is

placing orders for prompt shipment cargoes with regional producers as a

result.

The firming market is causing a panic buying spree, the trader

added. Several regional producers said they received firm bids for bulk-

based prompt shipments at $2,500/tonne CFR CMP. A producer said it is

currently adopting a “wait-and-see stance” as it is expecting the bullish

trend to hold in the coming weeks.

Meanwhile, regional BDO supply is expected to remain tight as Asian

producers were running their plants at below full capacity during the

fourth quarter because of weak demand.

Taiwan’s Nan Ya Plastics is operating its BDO unit at just above 50%

capacity because of narrowing production margins. Nan Ya Plastics

restarted its 60,000 tonne/year No 2 BDO plant in Mailiao on 11 February.

The producer is planning to ramp up its BDO operating rates at the plant to 100% capacity by the end of this week, a

company source said. The company is keeping its 40,000 tonne/year No 1 BDO plant at the same site shut, the source

added. Nan Ya Plastics shut its No 1 BDO plant on 20 January and No 2 BDO plant on 24 January because of weak

demand and to control its rising BDO inventory levels towards the end of its accounting year in 2011.

Japan’s Mitsubishi Chemical is maintaining the operating rates at its 60,000 tonne/year BDO plant in Yokkaichi at

70% capacity also because of narrowing production margins.

• Insight:CrudeMDIPriceTendencyAnalysis(2012-2-16)

Last year,Yantai Wanhua completed the technical reform of 600ktpa MDI plant in Ningbo. At the same time, the

capacity of Yantai Wanhua MDI unit is predicted to achieve 1800ktpa by 2015. The upcoming expansion in the next

few years sounds favorable to downstream clients. But to some traders, it is too early to make a conclusion now.

Crude MDI prices have been kept unchanged since

manufacturers slightly raised quotations in early February after

the Spreing Festival. Traders and middlemen are also willing

to boost up prices while the purchasing enthusiasm among

downstream clients remains low. Some small factories even stop

production to avoid high raw materials costs.

News comes that suppliers intend to increase prices in March.

However, the downstream demand will not improve substantially

in the short run. Thus the Crude MDI market approaches a

deadlock. As predicted by Pudaily Consultant, February or March

will be the most difficult time through 2012 and small fluctuations may occur.


China Polyurethane Market• WorriesbehindMountingPricesofTDI(2012-2-17)

TDI price has risen RMB20000/ton from

RMB18000/ton since late last year. Now

some resources are even quoted RMB21000/

ton. At the same time, BASF will continue to

increase TDI price in March, which encourages

some traders to keep firm quotations.

In view of the booming TDI market, facilities

shut down previously abroad gradually restart.

Mitsui’s 120ktpa TDI plant in Omuta operates

again with about 50% capacity. One 50ktpa

unit of KPX now runs with full load. Therefore,

TDI supply will be increased.

However, in the downstream, the demand

for TDI doesn’t improve substantially compared

with last year. It is known that the downstream

recovery comes 7-15 days later than previous

years due to employment difficulties and

sponge stocks. Additionally, many end users

already stocked up enough resources before

the Spring Festival. As a result, TDI business in

February is expected to remain slack.

• PolyetherPolyolsMarketSeemstoFall(2012-2-28)

PO price falls back in the domestic market. At the beginning of

this week, some suppliers reduce Polyether Polyols quotations

by RMB200/ton. It seems that the former firm market becomes

soft. Traders are holding negative attitude toward Polyether Polyols

business due to poor orders from the downstream. Generally

speaking, the future market may drop slightly in the short run.

Polyether Polyols factories mostly suffer the pressure over

storage. The operating rates of downstream factories improve very

slowly. Therefore, transactions are few in the Polyether Polyols

market due to the limited demand.

Downstream sector: Since the global economic situation is in

a slow recovery, orders received by downstream factories are not

satisfactory too. It is known that end users restart over half a month

later than previous years because of employment problems. Plus

weak demand in the terminal market, the purchasing enthusiasm of

downstream clients remains low.

• PureMDIPricesRiseOnFirmFeedstocksCosts(2012-3-7)

Pure MDI Market Overview in January and February:

Pure MDI market stays firm in January. Some traders

tentatively boost up quotations while high price transactions are

difficult when downstream clients are in holidays. In February, the

market starts to rise. Driven by increased list prices and USD

quotations, most traders are determined to raise prices though

the downstream demand improves very slowly. Transaction

prices are pushed up by a few purchases.

Pure MDI Market Forecast in March and April:

High list prices in March from domestic suppliers express

their positive attitude toward the future Pure MDI market. As for

the market abroad, NPU will restrict supply in March and April

in preparation for the maintenance in May. BASF’s MDI plant

in Korea plans to conduct maintenance in April. Consequently,

the USD quotations will further increase in March and April. Up to now, NPU resources are quoted about USD2500/ton

and BASF products are about USD2450/ton. Pressed by firm costs, the Pure MDI market will rise to some extent which

is partially determined by the downstream demand.


China Polyurethane Market• PPG Market Deteriorates on Low Demand (2012-3-15)

Due to the poor downstream demand, sales are

difficult for manufacturers. The market is likely to

be oversupplied and high prices lack support. Traders

and middlemen are active to sell stocks and few of them

set out to stockpile in large amount.

In 2012, the prospect may not be all roses for the

real estate industry. Presently, sponge factories and

other end users in downstream sectors still run with low

operating rates and they consume resources very slowly.

Meanwhile, the furniture business seems unsatisfactory

as well. A few customers start to purchase feedstocks

while most bring in materials in small amount.

On the whole, without favorable conditions, PPG

supply and demand in the market can not be balanced

in the short run. At the same time, there is no much

room for PPG price decrease. The future market is going

to consolidate as predicted.

• TDI Market Forecast in April (2012-3-23)

Entering late March, the continually rising TDI market

tends to fall back. Players hold different views

towards the future market. Optimists keep quotations

firm and strong; pessimists are worried about selling

stocks to avoid pressure over storage.

It is coming to the end of this month. List prices

from BASF and Bayer are drawing much attention

of market insiders, which will influence TDI price

tendency in April. It is known that BASF intends to

stabilize or increase prices by small margins. As for

Bayer, due to the outage of its TDI plant previously,

quotations are going to rise on tight supply. Domestic

suppliers may follow their steps.

However, the

poor demand

from downstream

factories is likely to

tie down the whole

market. Most end

users reflect that

this year is even

harder than before.

Operating rates

of some plants are 60%-70% of last year. In sponge

industry, low terminal demand curbs sponge prices.

On the whole, as predicted by Pudaily, TDI

quotations may stay steady at the beginning of April

and fall back to about RMB20000/ton in middle and late

April.








PUdaily EventsPUdaily Events

PUdaily Events2012 China Polyurethane and Emerging Industries Development & Investment Forum

August 30, 2012 Shanghai

Statistics show that the added value of emerging industries of strategic importance will account for about 8% of gross domestic product (GDP) by 2015. And various kinds of high-performance materials are going to be well applied in the emerging industries. The Polyurethane (PU) industry has attracted wide attention. In a bid to popularize PU products and technologies, provide a platform for PU industry information communication, PUdaily holds the “2012 China Polyurethane and Emerging Industries Development & Investment Forum”. Meanwhile, product exhibition is also available to display the new products and latest technology in an all-round way, bridging the vital cooperation platform for industry-university-research, market promotion and application.

Some Forum Speakers• How Middle& Small Enterprises Walk Out of DilemmaSpeaker: Wang Fuzhong, popular economist, Professor of Central University of Finance and Economics (CUFE), Doctor of Economic, guest of "Larry Lang's Talk Show"• How Domestic Enterprises Head for the WorldSpeaker: Yantai Wanhua Polyurethane Co., Ltd• Resources Economy and Chemical EnterprisesSpeaker: Cheng Yiheng, vice chairman of International Ecological Union, Asia Branch, Special invited expert of Chemical Industry Productivity Promotion Center of China• Global Polyurethane New Market Development OpportunitiesSpeaker: Frank Doerner, head of Commercial Operations for Greater China of Business Unit Polyurethanes (PUR), Bayer MaterialScience• How Middle & Small Enterprises Financing EffectivelySpeaker: Futao, Managing Director of Guotai Junan Securities CO., LTD

Admission• Forum Speaker: Free • Participants: USD 500/person • Project Promotion: USD 2000/20mins for Each Enterprise

Participants• Government organization leaders• Leasing Manager of Chemical Parks• Economist• Managers of Polyurethane Enterprises


PUdaily EventsPUdaily Events

PUdaily Events• Project Investors Home and Abroad

• PU-Related Associations at home and abroad

Project Promotion Topics• To Explore Non-Oil Polyurethane Material Actively• Shipping, Petrochemical, Metallurgy and Aerospace• The Application of Polyurethane in Wind Energy• Market Analysis of PU-Related Emerging Industry• Demand for Polyurethane Materials on New Energy Vehicles• The Application of Polyurethane in Solar Energy Integration• The New Material Application Development in High-Speed Rail (HSR)

• The New Development Opportunity of Polyurethane Industry Brought by Low-Carbon Economy









About PUdaily

PUdaily (www.pudaily.com) is a professional polyurethane website platform specializing in the information consulting and technical service mainly about Chinese market, as well as oversea markets. By offering resourceful PU information analysis, investment argumentation, industrial survey, feasibility study and market analysis, we are trying to help strengthen our clients' competitiveness, evade the business risks and get a better view of the domestic market development.

PUdaily Market Reports Include:• Polyurethane News Spotlight

• Price History and Trend

• Feedstocks Maket Dynamics

• Downstream Industry Glance

• Supply and Demand Analysis

• Facility Shutdown Schedule

• Market Review and Forecast

• Import and Export Statistics

•Products Introduction and Segmentation

For any subscription of PUdaily weekly, monthly or annual reports, please contact us at [email protected].

Contact:

Ms. Lucy Tang Suntower Consulting Co., Limited

2/F, Block B, Caohejing Software Building, No. 461 Hongcao Rd, Xuhui District, Shanghai, China

Direct Line: 86-21-61159285

Tel:86-21-61159288 Ext: 831

Mp:86-15000395962

E-mail:[email protected]


About PUdaily

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