(Yicai) July 22 -- Shares of Wanhua Chemical Group, the world’s largest supplier of toluene diisocyanate (TDI), extended their gains for a third straight day after a fire at German rival Covestro's plant disrupted TDI supply and triggered price increases.

Wanhua's stock price [SHA: 600309] rose 5.2 percent to CNY63.05 (USD8.80) in Shanghai today, bringing total gains since July 17 to 14 percent.

TDI prices in China climbed to CNY15,900 (USD2,217) per ton as of noon yesterday, up nearly 7 percent from the previous day, according to commodity tracker Baiinfo. Prices have now risen for five consecutive days and are up about 23 percent year to date. TDI is an organic chemical widely used in flexible polyurethane foams for furniture, bedding, seating, carpet underlay, and packaging.

On July 16, Covestro announced that its main TDI plant in Dormagen, Germany, had declared force majeure following a fire that caused failures in the power supply and control systems. The incident halted production of intermediary chemicals such as caustic soda, chlorine, and hydrochloric acid, severely impacting Covestro’s TDI output. The Dormagen facility has an annual TDI capacity of 300,000 tons.

Securities Times reported today, citing analysts, that the accident has broad implications. In addition to halting TDI output, the chlorine supply disruption has paralyzed downstream operations at the chemical park. Covestro said the timeline for resuming operations remains unclear.

Shandong province-based Wanhua is a major global chemical giant. As of last year, the firm had an annual TDI production capacity of 1.1 million tons. After commissioning a second 330,000-ton TDI facility in Fujian province, Wanhua's capacity will rise to 1.4 million tons annually, with an additional 360,000 tons planned by 2026.

Huatai Securities noted that the short-term overseas supply gap caused by Covestro's shutdown could support a rebound in TDI prices. In the longer term, rising energy and labor costs abroad are driving sustained capacity cuts, creating opportunities for Chinese leaders like Wanhua to expand their global market share.

Editor: Emmi Laine