Tale of two halves
For isocyanates, 2020 transformed into a Jekyll-and-Hyde kind of year, according to James Elliott, an IHS Markit principal analyst, who called it "volatile and chaotic."
"In the first half of 2020, supply was ample and healthy while demand was lackluster," Elliott said of the isocyanate market. "In the second half of the year, supply shortened, and demand rocketed—and it has remained really, really strong."
The back and forth of supply and demand likely will continue to be a challenge in the years ahead, but Elliott is confident that there won't be any shortages, at least for the medium term.
A major reason for that is capacity expansions planned in China. The country is poised to add enough capacity to allow for exports and has targeted the U.S. as one potential market.
Elliott also isn't ruling out additional capacity growth in the U.S.
"I think China is one of the fastest-growing countries in the world for MDI and TDI," Elliott said. "(But) future capacity in the U.S. definitely is possible as well in the MDI market and the TDI market."
While Elliott remains positive regarding the isocyanate market, there is one trend that could change the game: refinery closures. To date, he said, those closures haven't had an significant impact in the U.S.
"As of now, the U.S. market will not be affected that much in the short term," Elliott said, "but the bigger question is: How is this trend going to develop?"