Methylene Diphenyl Di-isocyanate (MDI) Market

Market Overview

The global methylene diphenyl di-isocyanate (MDI) market size was valued at USD 25.01 billion in 2022. It is estimated to reach USD 33.02 billion by 2031, growing at a CAGR of 5.22% during the forecast period (2023–2031). The global market for methylene diphenyl di-isocyanate is anticipated to expand over the projection period on account of its increasing use in the production of rigid polyurethane foam, which is then utilized in a variety of industries, including construction, refrigeration, insulation, and packaging.

MDI, also known as methylene diphenyl di-isocyanate, is an aromatic di-isocyanate. The orientations of the isocyanate groups around the rings distinguish three common isomers: 2,2′-MDI, 2,4′-MDI, and 4,4′-MDI. The most prevalent isomer is 4,4′-diphenylmethane di-isocyanate, also known as 4,4′-diphenylmethane di-isocyanate. This isomer is also referred to as MDI Pure. MDI and polyols react during the production of polyurethane.

MDI is a highly versatile molecule with diverse performance characteristics for various applications. The primary use of 4,4′-MDI is in the manufacture of rigid polyurethane. These rigid polyurethane foams are excellent thermal insulators used in buildings and nearly all freezers and refrigerators worldwide. Polyethylene adipate (a polyester) and poly (tetramethylene ether) glycol are typical polyols (a polyether). 4,4′-MDI is also utilized as a high-strength industrial adhesive, available to consumers in various high-strength bottle glue formulations.

Market Dynamics

Global Methylene Diphenyl Di-isocyanate (MDI) Market Drivers

Growing Demand for PU in Insulation in the Construction Industry

In the building and construction industry, PU manufactured from MDI makes high-performance materials with appreciable strength and are lightweight, durable, and versatile. It is also preferred because it helps enhance the aesthetic design of interiors. It is a key constituent in several high-efficiency insulation materials, sealants, and adhesives in home and building construction.

In PU foams, spray polyurethane foams (SPF) are an excellent choice for insulating and air-sealing. They help reduce air leakage, which results in low utility bills, decrease greenhouse gas emissions, and improve indoor air quality by eliminating infiltration of dust and allergens. As per the Department of Energy, heating and cooling costs contribute to 48% of the energy use in a typical US home. Spray polyurethanes are important solutions in improving a home's energy efficiency. Thus, the growing use of PU in the building and construction industry has driven the demand for MDI worldwide.

Expanding Scope of Application

MDIs occur in multiple structural variants ranging from pure monomeric to multifunctional polymeric MDIs (PMDI). Manufacturers mainly use monomeric MMDIs to prepare prepolymers for cast polyurethane applications, such as wheels, rollers, mechanical goods, TPU elastomers, and spandex fibers. The main markets for polymeric MDI manufacturers are rigid foams, which are extensively used in appliance insulation, packaging, and construction.

Semi-rigid and flexible foams are used in furniture, cushioning, transportation, vibration insulation, shoe soles, and synthetic leather. Polyurethanes manufactured from MDI are broadly used in the interior of car manufacturers and can be found in seats, armrests, and headrests inside the car. Its cushioning properties help decrease the fatigue and stress associated with driving. Such extensive use of MDI in several end-user industries is expected to augment market growth.

Global Methylene Diphenyl Di-isocyanate (MDI) Market Restraints

Toxic Effects of MDI

There are many harmful effects of MDI. MDI vapor, aerosol, or dust concentrations above the occupational exposure limit (OEL) may irritate the mucous membranes of the nose, throat, and lungs. The potential adverse effects of this condition include symptoms such as dryness in the throat, constriction in the chest, and problems in breathing. There is a potential for the exacerbation of asthma symptoms.

Furthermore, frequent overexposure of the skin, eyes, nose, or upper respiratory tract may cause chronic irritation. Individuals may even develop hypersensitivity to MDI vapors and, upon exposure to minute amounts, can cause difficulty in breathing. Long-term overexposure to di-isocyanates can also lead to lung damage, which may be permanent. Therefore, the toxicity associated with MDI may act as a restraint in the market's growth.

Global Methylene Diphenyl Di-isocyanate (MDI) Market Opportunities

Increasing Launch of Environmental-Friendly MDI

Increasing awareness of environmental degradation and greenhouse gas emissions drives demand for climate-friendly MDI products. For instance, in February 2022, BSAF expanded its portfolio of MDI and launched Lupranat ZERO, a greenhouse gas-neutral aromatic isocyanate, as a significant step toward a sustainable polyurethane value chain. TÜV Nord, a German technical inspection association, has effectively verified the PCF calculation for this product, used in the construction industry to produce MDI polyisocyanurate panels and rigid polyurethane foam. The company's product portfolio includes additional variants of MDI-based products manufactured using renewable raw materials.

Similarly, the German chemical company Covestro introduced eco-friendly MDI in February 2022, which has applications in the automotive, construction, and cold-chain industries. ISCC PLUS-certified Covestro facilities in Krefeld-Uerdingen, Antwerp, and Shanghai manufacture climate-neutral MDI and its precursors. Therefore, the launch of such eco-friendly products is estimated to create opportunities for market growth.

Regional Analysis

Based on region, the global methylene diphenyl di-isocyanate (MDI) market is bifurcated into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa. 

Asia Pacific Dominates the Global Market

Asia-Pacific is the most significant global methylene diphenyl di-isocyanate (MDI) market shareholder and is expected to expand substantially during the forecast period. The MDI market in the region is expected to expand due to rising demand in emergent economies such as China and India. The methylene diphenyl di-isocyanate market in the region is anticipated to be boosted by expanding end-user industries such as construction, electronics, and automotive. China is the globe's largest producer and consumer of electric vehicles. China is the greatest electric vehicle producer and consumer, with 1.2 million new electric vehicles registered in 2018. The availability of inexpensive labor, land, and raw materials combined with a relatively lax regulatory environment is expected to drive up demand for MDI in China.

Additionally, a shift in consumer perception began to fuel the market for energy vehicles after the pandemic. As per the China Association of Automobile Manufacturers, the manufacturing of new energy passenger and commercial cars in November 2020 amounted to 111,900 units. Likewise, the sales of new energy vehicles until November 2020 reached 110,900, registering a 3.9% Year-on-Year growth. Therefore, the country's growing demand for electric vehicles drives the market studied during the forecast period.

The North American market is estimated to expand steadily over the forecast period due to the increasing adoption of methylene diphenyl di-isocyanate in the automotive, electronics, and construction industries. Increasing adoption of MDI in plastic products is also anticipated to boost market revenue growth. According to government data, the U.S. plastics industry had 15,688 manufacturing establishments, employed 758,000 people, and shipped 334 billion USD worth of plastics products in 2020. As a result of the rapid pace of innovation, technological developments, and R&D activities in the electronics sector, there is a substantial demand for newer and faster electronic products. In addition, there has been a strong increase in the number of manufacturing plants and development centers in the United States lately, primarily due to the focus on developing high-end products. The growing demand for electronics products is estimated to drive the market in the country.

The European market is anticipated to record a modest revenue growth rate over the forecast period due to the flourishing demand for MDI in the automotive sector across the region, particularly in the United Kingdom and Germany. MDI is used in producing polyurethane sealants, which have various applications in the automotive industry and are primarily used for side windows and windshield installation. In addition, Europe is a significant center for major automakers such as Audi AG, Fiat Chrysler Automobiles NV, and Volkswagen Group. According to the European Automobile Manufacturers Association (ACEA), in 2021, the production of commercial vehicles in Europe increased by 4.9% over the previous year, while the number of light motor vehicles registered increased by 13.7 million. Therefore, the flourishing automotive sector in the region is expected to boost market growth. The region's harsh climate is anticipated to propel the insulation agent market, boosting the MDI market over the forecast period. However, the region's stringent environmental protection regulations are expected to constrain the market.

In the Middle East and Africa, the MDI market is still nascent. However, increasing efforts to increase market penetration in emerging markets will present market participants with opportunities. Numerous residential and commercial projects are being undertaken in Saudi Arabia, which is anticipated to increase construction activity in the country. Some of these projects are underway or in various stages of development, including a USD 500 billion futuristic mega-city 'Neom' project, the Red Sea Project – Phase 1, which is scheduled for completion in 2022, 14 luxury and hyper-luxury hotels that may consist of 3,000 rooms, across five islands, and two inland resorts. Such projects will likely drive demand for MDI products from various construction sector applications.

Segmental Analysis

The global methylene diphenyl di-isocyanate (MDI) market is segmented by application and end-user industry.

Based on application, the global methylene diphenyl di-isocyanate (MDI) market is bifurcated into rigid foam, flexible foam, coatings, elastomers, adhesives and sealants, and other applications.

The rigid foam segment dominates the global market. Rigid foam is one of the most versatile products manufactured by MDI and is extensively used across various end-use industries. The primary consumption of rigid foam is in insulation applications. The rigid foam market is growing due to increasing demand from consumer industries such as furniture, bedding, automotive, electronics, and construction. Rigid foams are usually employed in a variety of industrial products and processes. Rigid foams are usually employed in a variety of industrial products and processes.

Additionally, rigid foams are widely utilized in many buoyancy applications, with surfboards for navigation particularly prevalent. They are also used in energy-absorbing applications, such as shock and explosive blast wave dissipation, and as industrial filters and carrier materials for biomedical research. Robust R&D activities are being carried out regarding manufacturing rigid foams from bio-based MDI (bio-based aniline as a precursor). This is predicted to offer lucrative opportunities for the rigid foam segment growth in the near future.

Flexible foam is the largest segment of conventional polyurethane. The production of flexible PU foam involves more TDI (Toluene Diphenyl di-isocyanate) compared to MDI. Therefore, the impact of flexible foam application on the overall MDI market is much lesser than that of rigid foam application. In addition, flexible foams are used as cushioning in various commercial products, including bedding, furniture, automotive interiors, and packaging. It is light, durable, comfortable, and supportive. According to American Chemistry, flexible foam accounts for about 30% of the North American PU market. The region uses flexible foam for bedding, furniture, and automotive industries.

Based on the end-user industry, the global market is segmented into construction, furniture and interiors, electronics and appliances, automotive, footwear, and other end-user industries. 

The construction segment owns the highest methylene diphenyl di-isocyanate (MDI) market share. Construction is the largest MDI market end-user industry, used in various commercial, household, and industrial applications. The use of rigid PU foam as wall and roof insulation, insulated panels, and gap dividers around doors and windows is one of its most widespread applications. Most rigid PU foam in construction applications comprises polyiso laminate board material, primarily used for roofing and wall insulation. Some rigid PU foams can fill spaces and cover irregular shapes. These foams include aerosol foams, pour-in-place foams, and single-component foams. In addition, the increasing construction and renovation activities and the rising number of new projects are further creating growth potential for polyurethane globally, which, as a result, glimpses the positive growth of the market studied throughout the forecast period.

Regarding PU, the electronics and appliances segment records the fastest growth. Non-foam PUs, often called 'potting compounds,' are frequently used in the electrical and electronics industry to enclose, seal, and insulate fragile, pressure-sensitive microelectronic components, underwater cables, and printed circuit boards. Rigid PU foam is the most extensively used material to insulate refrigerators, freezers, hot water heaters, and vending machines. Rigid PU foams are well-suited to insulate appliances due to their low volatile organic compound emissions, dimensional stability, and ease of application.

Rigid PU foam is also an essential and cost-effective material that can meet the required energy ratings in consumer refrigerators and freezers. In addition to rigid PU foams, durable PU coatings protect appliances against rust and heat. PU coatings are also used to protect wires and other electronics and appliances.

Recent Developments

• January 2023- BASF began construction on the third and final phase of the methylene diphenyl diisocyanate (MDI) expansion project announced in July 2022 at its integrated site in Geismar, LA. To support the continued growth of its North American MDI customers, the company will increase its annual production capacity to approximately 600,000 tonnes by mid-decade.
• June 2023- Huntsman's manufacturing facilities in Rotterdam and Wilton, United Kingdom, were granted the International Sustainability & Carbon Certification (ISCC PLUS) for mass balancing after an inspection conducted by Bureau Veritas. With ISCC PLUS certification, Huntsman can now provide its consumers with methylene diphenyl diisocyanate (MDI) manufactured using mass balance principles, which can help minimize the carbon footprint of adhesives and coatings.