Unplanned Shutdown Hits BASF Dahej MDI Unit, Squeezing South Asia Supply

On June 1, 2026, BASF reported an unplanned production stoppage at the MDI splitter unit of its integrated polyurethane complex in Dahej, Gujarat, India. The affected unit, which handles the processing, purification, and packaging of crude MDI (methylene diphenyl diisocyanate), has an annual processing capacity of around 50,000 tons and serves as a key node in BASF's South Asian supply system. The Dahej site is South Asia's first MDI splitter and supplies downstream sectors across India, Southeast Asia, and the Middle East.

MDI is a foundational building block for the polyurethane industry. It is used in thermal insulation, refrigeration, automotive interiors, synthetic leather, adhesives, construction materials, and home appliances. Global production is concentrated among a small group of suppliers, mainly Wanhua, BASF, Covestro, and Huntsman, which makes the market sensitive to any single plant disruption.

As of early June, BASF has not disclosed the cause of the failure, the expected duration of the shutdown, or a restart date. The company has not confirmed whether a force majeure declaration has been filed for the Indian unit. Because this is a sudden equipment or process failure rather than a planned turnaround, the recovery timeline remains uncertain, and the impact on regional spot supply is difficult to predict.

The stoppage lands at an already fragile moment for the global MDI market. Supply has been tightening since late 2025, and the situation worsened after the closure of the Strait of Hormuz in late February 2026 sent European natural gas prices climbing. Natural gas is a primary input for MDI production, which has pushed up costs across the value chain. Major carriers have rerouted away from disrupted shipping lanes, adding to delivery delays.

A wave of producer price moves preceded the Dahej event. Huntsman lifted US MDI prices by 260 dollars per ton effective February 17, BASF raised ASEAN prices by 200 dollars per ton effective February 25, and Covestro increased North American prices by 220 dollars per ton effective March 1. On May 19, Covestro declared force majeure on all MDI products in North America following unexpected production failures, with market reports pointing to similar issues at Dow units tied to carbon monoxide and chlorine feedstock supply. BASF then raised prices on its full Lupranate series on May 29, with a single increase of 0.35 dollars per pound, the steepest move of that period. BASF has also signaled a 45-day maintenance shutdown of overseas facilities starting in July.

Analysts expect the Dahej disruption to tighten spot MDI availability further in South Asia. Indian demand for rigid polyurethane has been supported by appliance trade-in incentives and infrastructure investment across the region. With global supply already contracted and inventories low, the regional capacity loss is likely to add pressure to short-term spot prices. Forecasters project a global MDI supply gap of 650,000 to over 1 million tons across 2026 and 2027, although new capacity from Wanhua Fujian and BASF USA in the second half of 2026 is expected to ease some of the strain.

Industry groups continue to track the failure investigation and restart progress at Dahej. The pace of recovery and BASF's supply allocation choices will be central to near-term supply, demand, and price trends in the Asian MDI market. With capacity swings becoming more frequent and sudden plant issues recurring across the sector, the global MDI supply chain is expected to stay tight through the rest of the year.