Overview of TDI China
Toluene Diisocyanate (TDI) is a critical intermediate in the global polyurethane value chain, primarily consumed in the production of flexible polyurethane foams. These foams are widely used across furniture, bedding, automotive seating, packaging, and consumer comfort applications. Due to its cost efficiency and performance characteristics, TDI continues to play a dominant role in flexible foam formulations compared to alternative isocyanates in price sensitive markets.

Upstream Market Structure
The upstream segment of the TDI market is closely linked to the availability and pricing of key raw materials, particularly toluene, nitric acid, phosgene etc. Energy costs also remain a significant component of total production expenses, especially in regions with high utility tariffs.

TDI production is highly capital-intensive and increasingly consolidated, with large integrated producers controlling a significant share of global capacity. China has emerged as a major manufacturing hub; however, production remains sensitive to plant shutdowns, maintenance turnarounds, and environmental compliance requirements, which often lead to abrupt supply fluctuations.

Downstream Market and End-Use Industries
Demand trends in the TDI market closely mirror consumer spending patterns, construction activity, and automotive production cycles. Any slowdown in these sectors has a direct and immediate impact on TDI consumption, particularly in Asia and Europe.

Current China and global Price Scenario (January 2026)
As of January 2026, global TDI prices are largely stable but reflect a clear correction from the highs recorded at the end of 2025:

  • FOB China: ~$1,700/MT
  • CIF Europe: ~$2,165/MT
  • CIF South Korea: ~$1,850/MT
  • CIF Middle East: ~$1,876/MT
  • CIF Southeast Asia: ~$1,773/MT

FOB China prices have declined from early January 2026 levels of around $1,850/MT, indicating easing demand and improved short-term supply availability.

Key Factors Behind the Late-2025 Price Surge in China
The late-2025 rise in TDI prices was driven mainly by tightening supply conditions and rising production costs. Extended shutdowns and lower operating rates at several overseas plants reduced spot availability, particularly in export markets. At the same time, higher raw material and energy costs pushed producers to raise offers, while a sharp drop in China’s TDI imports further limited domestic supply. Increased market concentration among leading Chinese producers strengthened pricing power, and a series of firm price announcements in December added to volatility and accelerated the upward price movement.

China Market Correction in Early 2026
Despite the strong momentum in late 2025, the market entered a correction phase in early 2026. Downstream demand from flexible foam and automotive segments remains seasonally weak, while buyers are resisting further price increases after aggressive year-end restocking.

Export demand from China has softened, increasing FOB availability and putting pressure on spot prices. In parallel, the gradual restart of some overseas plants has marginally eased global supply tightness. As a result, prices have stabilised at lower levels, particularly in Asia.

Q1 2026 Market Outlook
For the current quarter, the TDI market is expected to remain range-bound with a mild downward bias, unless disrupted by unexpected supply outages.

  • Asia: Prices are likely to stabilize near current levels, supported by cost floors but capped by weak demand.
  • Europe: CIF prices remain elevated due to logistics and regulatory costs, though buying interest remains cautious.
  • Middle East and Southeast Asia: Markets are expected to follow Asian pricing trends, with limited upside potential in the near term.