Evonik Declares Force Majeure: IPDI Supply Crisis & Soaring Prices

Breaking! Evonik Faces Force Majeure! Global 35% Capacity in Crisis, Raw Material Prices Surge!

Evonik Declares Force Majeure! Supply of This Material to Be Cut Off?!

Recently, Evonik issued a force majeure declaration regarding VESTANAT® IPDI.

According to the statement, an unforeseen and unavoidable technical issue at its supplier has directly impacted production, leading to the declaration of force majeure on the supply of VESTANAT® IPDI. Evonik further stated that it will be unable to provide confirmed or ordered quantities of this product in the coming weeks and is uncertain how long this situation will last.

Isophorone diisocyanate (IPDI) is an aliphatic diisocyanate widely used in plastics, adhesives, pharmaceuticals, and fragrances.

Since Evonik is unable to fulfill customer orders as planned, the supply chain has been disrupted. Given IPDI’s extensive applications, instability in its supply could significantly impact downstream industries.

Supply Constraints! IPDI Prices Surge!

As of March 27, the domestic IPDI market prices have risen, with mainstream domestic IPDI offers in the secondary market ranging from 35,000 to 39,000 CNY per ton.

On March 25, the IPDI East China price range was between 38,000 and 40,000 CNY per ton. By 2 PM that day, affected by Evonik’s force majeure, suppliers raised their offers, and final transaction prices remain to be seen.

The domestic IPDI price surge continues, with mainstream market prices now between 38,000 and 40,000 CNY per ton, reflecting an increase of 1,000-2,000 CNY per ton.

Global Capacity Only 140,000 Tons/Year! Prices Once Soared to 100,000 CNY/Ton!

Due to high technological barriers, only five companies globally produce IPDI: Evonik (50,000 tons/year), Covestro (35,000 tons/year), BASF (5,000 tons/year), Conren (20,000 tons/year), and Wanhua (30,000 tons/year), with a total global capacity of approximately 140,000 tons. Evonik alone accounts for 35.7% of the capacity. Covestro’s Shanghai IPDI production line is currently shut down, and most IPDI now comes from European and American plants. Evonik’s force majeure may significantly impact stable market supply.

Before Wanhua Chemical’s production started in 2016, China almost entirely relied on imports, with prices maintaining around 70,000-80,000 CNY per ton. After Wanhua’s production capacity increased to 30,000 tons in 2020, prices slightly dropped to around 60,000 CNY per ton. In 2021, a fire at Covestro’s German plant caused a sharp decline in IPDI production, sending prices soaring to 100,000 CNY per ton.

With Evonik’s force majeure, domestic IPDI supply will rely solely on Wanhua Chemical’s 30,000-ton capacity in the short term. Although Shandong NHU and Wanhua Chemical have pending production facilities, NHU’s 21,000-ton IPDI production line in Weifang, Shandong, originally scheduled for mass production in Q3 2024, has no confirmed start date. Wanhua’s 50,000-ton expansion project’s commissioning date remains unknown. Given these uncertainties, IPDI prices are expected to continue rising.

However, IPDI market prices are influenced by multiple factors, including global supply and demand, raw material costs, production efficiency, and market risk appetite. While Evonik’s supply disruption is a key factor, predicting future price trends requires a comprehensive assessment of these variables.