March 2026 has brought extreme volatility to China’s Toluene Diisocyanate (TDI) market, shaped by a confluence of escalating geopolitical tensions, wild swings in crude oil and toluene pricing, and industry-wide low inventories. Domestic plant operating rates remain unsteady amid frequent maintenance shutdowns, while global supply disruptions have further tightened spot availability. TDI prices spiked in early March on cost and supply tailwinds, only to face significant resistance from weak downstream demand and a pullback in raw material costs. In the short term, the market is set to remain in a broad, volatile consolidation phase, with supply-demand dynamics and geopolitical developments emerging as the core focus for market participants.
I. Unstable Plant Utilization: High Supply Uncertainty Persists
Tight TDI supply in March 2026 is driven by a dual blow of domestic plant maintenance and global supply chain disruptions, with capacity utilization rates remaining well below historical averages and no clear near-term recovery in sight.
Domestically, China’s TDI production landscape is marked by frequent shutdowns and production cuts: the national capacity utilization rate hovers at 70%-75% in March, a notable drop from the previous month’s average. Over 15 domestic TDI producers operate in the market, and 6 key plants have implemented production cuts or full shutdowns—accounting for approximately 35% of total national capacity. February’s wave of plant outages led to a sharp decline in domestic TDI output, and as March began, idled capacity remained offline; major facilities in East and North China have also launched scheduled maintenance plans, further suppressing national production volumes.
This supply squeeze is amplified by a low industry inventory environment following continuous inventory drawdowns in February, magnifying the market impact of reduced operating rates.
Globally, supply disruptions have eliminated meaningful import support for China’s market:
BASF’s 160,000 tons/year TDI plant in South Korea is undergoing routine maintenance;
European and US TDI facilities have faced force majeure declarations and unstable operation;
Middle Eastern TDI exports (Saudi Arabia, Iran) are blocked due to shipping lane disruptions and geopolitical tensions.
The combined effect of domestic production curbs and global supply tightness has left China’s TDI market with limited spot availability and minimal import supplements, sustaining the supply-side bullish backdrop.
II. Sharp Price Swings: Cost Volatility Meets Downstream Demand Resistance
China’s TDI market has seen drastic price fluctuations in March, driven by extreme volatility in crude oil and toluene—TDI’s core raw materials—with the market now caught in a tug-of-war between cost push and weak downstream demand absorption.
By March 24, the benchmark TDI price in East China had surged to 18,266.67 RMB/ton, marking a 21.24% increase from the start of the month. The early-March price spike was triggered by the escalation of the Israel-Palestine conflict, which disrupted navigation through the Strait of Hormuz, sent international crude oil prices soaring, and pushed toluene costs sharply higher—creating a strong cost-driven rally for TDI.
However, the rally proved unsustainable: a subsequent sharp correction in international crude oil prices led to a rapid drop in toluene costs, easing TDI’s cost pressure. At the same time, weak downstream undertaking capacity emerged as a major headwind: market participants showed little willingness to chase high prices, the spread between contract and spot prices widened significantly, and spot quotations became fragmented as some profit-taking sellers offloaded inventory at discounted rates—dragging down the overall market price core.
Cost pressures have forced TDI’s key downstream products (sponges, curing agents) to raise prices in turn, but price transmission to terminal markets has hit significant resistance. Weak end-consumer demand has left downstream buyers highly resistant to high raw material prices, resulting in sluggish overall market transactions and limiting further TDI price gains.
III. Market Forecast: Volatile Consolidation Amid Tight Supply & Cautious Demand
In the short term, China’s TDI market is expected to trade in a broad, volatile consolidation range, supported by tight supply and low inventories but capped by weak downstream demand and ongoing cost volatility. Key market dynamics to watch include:
Supply Side: Tightness to Persist, Gradual Recovery Expected
The restart timeline for China’s idled TDI capacity remains uncertain, with no immediate production increase plans for most reduced-load units. Domestic plants will continue to operate at medium-to-low loads, providing steady supply-side support for the market. A modest increase in domestic supply is expected in late March, but global supply tightness—driven by overseas plant maintenance and geopolitical disruptions—will limit the scale of this recovery. With industry inventories at multi-month lows, producers are prioritizing contract customer deliveries and face no spot selling pressure, further underpinning price levels.
Demand Side: Cautious Buying Dominates Amid High Price Resistance
Downstream users are showing strong resistance to high TDI prices, with operating rates falling compared to mid-to-late February. Core downstream sectors (sponge, curing agent manufacturing) are prioritizing contracted raw material purchases, with spot buying limited to rigid demand only. This cautious buying behavior will cap upward price momentum, even as supply remains tight.
Core Market Drivers
The TDI market’s near-term trajectory will be dictated by three key factors:
Geopolitical developments: Resolutions to Middle East tensions and shipping lane disruptions will drive crude oil and toluene price trends, the core cost drivers for TDI;
Domestic plant restart progress: The timing of maintenance completions and production resumptions will determine the pace of domestic supply recovery;
Downstream demand transmission: Improvements in end-consumer demand will be needed to ease price resistance and support sustainable TDI price gains.
Overall, the TDI market’s price fluctuation pace is expected to slow, with the market now focused on the ongoing game between tight supply fundamentals and weak downstream demand.
Achilles Chem: Reliable TDI Supply Amid Global Market Volatility
Against the backdrop of tight global TDI supply, sharp price volatility, and geopolitical uncertainty, Achilles Chem’s Toluene Diisocyanate (TDI) delivers a stable, high-quality solution for polyurethane manufacturers worldwide. Our TDI (including TDI-80/20) meets stringent ISO9001 international standards, with consistent purity and performance that serves as a reliable alternative to global brands including Covestro, Wanhua, Hanwha, and BASF—especially in African, Asian, and Latin American markets.
Ideal for flexible polyurethane foam, CASE applications (coatings, adhesives, sealants, elastomers), insulating materials, and synthetic rubber production, our TDI is backed by a robust global supply chain and reliable technical support, ensuring timely delivery to key markets including Kenya, Taiwan (China), Egypt, and Brazil. We offer flexible packaging (250KG drum) and customized solutions to meet the unique production needs of our customers, helping them navigate supply chain disruptions and price volatility to maintain production continuity.
For inquiries about our TDI product portfolio, supply capabilities, or technical specifications, contact our sales team via +86 15054213961 or email at info@achilleschem.com.
