German chemicals producer Covestro is expecting to resume toluene diisocyanate (TDI) production at its 270,000 metric ton/year Dormagen facility in Germany by mid-November, following completion of planned maintenance, market sources told OPIS Wednesday.
The producer began maintenance work at the unit in early October, according to the same sources.
Covestro declined to provide any details of TDI production status to OPIS, but did confirm that the force majeure declared in early August, due to a leak at its chlorine production unit, remains in place.
As a result of the force majeure, Covestro was “partially” operating the Dormagen plant, and “working on gradually increasing production volumes in the next few months,” it told OPIS in May.
The restart of the facility is unlikely to increase consumption of spot toluene as feedstock, because supply is covered by contractual volumes, according to analysts at Chemical Market Analytics (CMA), by OPIS, a Dow Jones company.
“It is unlikely that the market will see an impact,” said Megan Brenchley, principal research analyst at CMA. “Demand from the chemicals sector has been weak for the most part of the year and expected to remain so for the rest of 2023.”
Meanwhile toluene extraction rates remain low due to economic reasons, tightening spot supply, sources said.
Spot European toluene prices dropped to an average of $970/metric ton FOB Amsterdam-Rotterdam-Antwerp on the back of weak demand from the chemical and gasoline sectors, according to OPIS data Wednesday, down from $1,320/mt on Aug. 24 during the summer driving season.
The toluene market balance is expected to remain weak during November and December, “unless something unexpected happens from a supply point of view,” said Brenchley.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
–Reporting by Fahima Mathé, [email protected]; Editing by Rob Sheridan, [email protected]
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