The global toluene diisocyanate (TDI) market is undergoing a seismic shift—supply growth has slammed on the brakes outside China, while the nation solidifies its position as the undisputed core of global production, exports, and future capacity expansion. In 2026, Covestro’s Shanghai plant stands as the sole new capacity addition worldwide, with Hualu Hengsheng’s planned project set to become the only major expansion in the years ahead. This concentration of growth in China, coupled with shrinking overseas capacity and widening global supply gaps, is reshaping pricing dynamics and cementing China’s decisive influence over the TDI industry.
Covestro’s Shanghai Expansion: A Cornerstone of Asia-Pacific Supply
On January 30, Covestro marked a major milestone with the successful completion of a TDI capacity expansion at its integrated site in Shanghai Chemical Industry Park. The upgrade boosts annual production capacity from 310,000 tons to 370,000 tons—a nearly 20% surge—without requiring additional land or large-scale infrastructure investment. Instead, the company leveraged process optimization and equipment upgrades, reducing costs, shortening the construction timeline, and aligning with green development principles.
This expansion elevates the Shanghai facility to Covestro’s largest global TDI production base, surpassing its 300,000-ton Dormagen plant in Germany. The move strengthens Covestro’s supply capability in the Asia-Pacific region, a key growth market driven by booming downstream industries such as polyurethane foams, coatings, and adhesives. For manufacturers in the region, the expanded capacity ensures more stable access to high-quality TDI, supporting their own production scalability.
2025: China’s TDI Industry Takes Global Leadership
2025 was a transformative year for China’s TDI sector, marked by two pivotal developments that solidified its global dominance:
• Domestic Capacity Growth: Wanhua Chemical’s new 360,000-ton/year TDI plant in Fujian successfully commenced operations, significantly boosting China’s total production capacity and laying the groundwork for export growth.
• Export Surge Amid Global Supply Gaps: Overseas TDI capacity continued to shrink, with plants owned by BASF, Japan’s Tosoh, and facilities in Argentina shutting down or reducing production. This created a widening global supply gap, which Chinese enterprises filled by leveraging their stable production and cost competitiveness. Exports soared, with key destinations concentrated in emerging markets such as Vietnam, Indonesia, Brazil, and India. ASEAN and South Asia—regions lacking local TDI production and highly dependent on imports—emerged as China’s primary export markets, further entrenching China’s role as a global supply hub.
2026: Tightening Supply and Rising Prices
The global TDI supply-demand imbalance has intensified in 2026, with supply shortages driving prices upward:
• Widespread Production Shutdowns: As of January 2026, TDI production capacity under maintenance shutdowns accounted for 24% of the global total. Temporary closures include South Korea’s Hanwha, Wanhua’s Xinjiang facility, and India’s GNFC 67,000-ton plant, adding to earlier outages, reduced loads, or halts at Xinjiang Juli, Fujian Wanhua, and Gansu Yinguang. These disruptions have tightened global supply significantly.
• Price Uptick: Domestic Chinese TDI prices have risen to 14,300–14,500 RMB/ton, reflecting strong industry vitality and the impact of constrained supply. For global buyers, this price trend underscores the growing influence of China’s production and export dynamics on global pricing.
Global Expansion Stagnation: China as the Sole Source of New Capacity
A defining feature of the current TDI landscape is the near-total stagnation of global capacity expansion outside China. In 2026, Covestro’s Shanghai upgrade is the only major new capacity addition worldwide. Beyond 2026, there are very few clearly planned TDI projects globally—with Hualu Hengsheng’s 300,000-ton facility being the sole exception.
Hualu Hengsheng’s project entered the planning stage in January 2026, with a 24-month construction timeline scheduled to conclude in December 2027. This means that in the coming years, nearly all major proposed and under-construction TDI capacity will be concentrated in China. The nation is set to become the sole core source of new global TDI supply, and the pace of its capacity release will directly shape the supply-demand balance and price trends in the Asia-Pacific region and beyond.
China’s Dominance: Opportunities and Challenges
China’s ascent as the global TDI hub brings significant opportunities, along with key challenges:
• Opportunities: As the world’s largest producer and exporter, China holds decisive influence over global supply, demand, and pricing. The concentration of new capacity allows Chinese enterprises to leverage economies of scale, enhance cost competitiveness, and deepen relationships with key export markets. For downstream industries globally, China’s stable production provides a reliable supply chain lifeline amid shrinking overseas capacity.
• Challenges: China’s growing dominance also exposes the industry to potential volatility, including fluctuations in raw material prices (such as toluene and nitric acid) and overseas trade barriers. Additionally, the industry must balance capacity growth with environmental sustainability, as stricter global emissions regulations require continued investment in green production technologies.
Strategic Implications for Stakeholders
For manufacturers, traders, and downstream buyers, the shifting TDI landscape demands strategic adaptation:
• Manufacturers: Chinese TDI producers should capitalize on export opportunities in emerging markets, while investing in R&D to enhance product quality and environmental performance. Partnering with global distributors can help expand market reach and mitigate trade barrier risks.
• Downstream Buyers: Global buyers should strengthen relationships with reliable Chinese suppliers—such as trusted TDI producers with a track record of stable supply—to ensure consistent access amid tight global capacity. Long-term supply contracts can help mitigate price volatility.
• Investors: The concentration of future TDI capacity in China makes Chinese producers attractive investment targets, particularly those with clear expansion plans and strong environmental, social, and governance (ESG) credentials.
Conclusion: China’s Irreversible Leadership in Global TDI
The global TDI industry’s center of gravity has firmly shifted to China, driven by shrinking overseas capacity, robust domestic production growth, and the concentration of future expansion projects. Covestro’s 2026 Shanghai upgrade and Hualu Hengsheng’s upcoming facility underscore this trend, positioning China as the sole engine of global TDI supply growth. As the nation further solidifies its role as the world’s largest producer and exporter, it will shape the industry’s trajectory for years to come—balancing opportunities for growth with the need to navigate volatility and sustainability challenges. For stakeholders across the value chain, adapting to China’s dominant role is no longer optional but essential for long-term success in the global TDI market.
