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Unstoppable increasing price of synthetic leather

Published : 2016-10-19 16:48:24

Since last September 15th to 20th in 2016, a large amount of synthetic leather manufacturers have released the price rising information of synthetic leathers. The amount of increase ranges from 0.3RMB/Meters to 0.5RMB/Meters. However, many factories announce that the price would increase again compared with the price they increased last month. Inconceivable, the time of this announcement is less than one month! Whats more, the amount of increase this time is even more than last time. Most of factory increased the price of synthetic leather range from 0.5RMB/Meters to 1RMB/Meters.


The announcements of some manufacturers are showed below: 


One leather factory in Zhejiang has announced the price rise 1RMB/Meters since October 20th.


One leather factory in Fujian has announced the price rise 0.5RMB/Meters since October 10th.


Analysis this price increasing issue from so many factories, the main reason is the rising of raw materials price for producing leathers. Except that, the rising of factory’s labor costs and logistics costs are also reasons to push price into a higher stage. 


Here is a picture which is forwarded frequently in Wechat recently:


According to this picture, someone who cares about the price of synthetic leather would ask what is TDI?


TDI: The full name of it is Toluene-2,4-diisocyanate or 2,4-tolylenediisocyanate.

Molecular formula: C9H6N2O2; CH3C6H3(NCO)2

Main application: Its mainly used in the production of soft polyurethane foam (commonly known as sponge) and polyurethane elasticity object, coating, rubber adhesion agent, etc.


Although TDI not the main raw material in synthetic leather resin, in some artificial leather resin and surface treatment agent, there are many products based on TDI. So the crazy increase of TDI will be a huge problem to most of synthetic leather’s producing cost. According to observation, the main reason to increase the leather price base on several raw materials is TDI.


The increase rate of TDI in 2016 shows below:


As we can analysis from above chart, the price of TDI in January is 11000 RMB/Ton, however in the middle of October, it has risen to more than 50000 RMB/Ton. Especially in recent October, its almost rise 2000RMB/Ton day by day! (October 12th daily price is 38000RMB/Ton, on October 13th, clinch a deal valence increased to 48000RMB/ton, on October 14th, daily price rise up to 58000RMB/Ton). Investigate the reason why it increase unbelievable, its mainly because of the global TDI production manufacturers. The production reduced or even stopped lead to the shortages of TDIs supply. At the same time, October is all kinds of leathers producing peak month. In this way, it intensified the contradiction between supply and demand.


So why lots of TDI manufacturers reduce producing TDI or even stopped?


According to one of the domestic TDI manufacturers ---- Cangzhou Dahua Chemical Company, announced on October 13th, it said: since the end of March 2016, TDI market affected by foreign enterprise device’s faults and maintenance. TDI supply decrease and domestic product export increase, this contrast drives domestic TDI product price begin to rise.


Lets look at some issues occurred in this year for TDIs decrease:


German BAYER Ltd TDI unit was forcing majeure events.

India GNFC factory 67000 tons of TDI devices was in maintenance and it expected to be repaired in 20 days.

South Korea basf Ltd and OCI Ltds TDI installations will be repaired in November.


According to the marketing situation of supply and demand analysis, with domestic and foreign enterprise equipment repaired, later TDI price is expected to be back to normal level. However, with this round of price boom of TDI, it will definitely affected the artificial leather prices goes up and indirectly cause inflation of price of global related products such as bags, shoes, clothing, sofa, sporting goods, etc. How much effects does the increased price leather will impact on the terminal consumer market still needs to be given time to verification.