Material Insights · Understanding the Material World

Chlorine and Polyurethanes (MDI, TDI, polyols)

MDI and TDI, the isocyanate half of polyurethanes, are made with phosgene from chlorine and carbon monoxide. The chlorine does not stay in the foam: it leaves as hydrogen chloride, which plants recycle to chlorine or sell, so isocyanate complexes are built beside chlor-alkali or HCl recovery units.

Chlorine (chemical) and Polyurethanes (MDI, TDI, polyols) (chemical): 4 relationships.

How they are linked

1. Chlorine via phosgene

Physical flow · Strong · Chlorine into MDI and TDI

Amines are reacted with phosgene to make isocyanates, and phosgene is made on site from chlorine and carbon monoxide because it is too toxic to ship.

  • 55% share of world phosgene demand for MDI, including polymeric MDI, 2021
  • 27% share for TDI, 2021

MDI and TDI together took about 82% of world phosgene in 2021, and the top phosgene makers, Covestro (24% of capacity), Wanhua (22%) and BASF (18%), are also the main isocyanate producers. Mainland China is the largest phosgene producer and user. Olin lists urethanes among its main chlorine and caustic markets.

Sources: S&P Global Commodity Insights; Olin Corporation (US SEC filing)

2. HCl by-product

Joint production · Strong · Isocyanate plants release HCl

Phosgenation releases the chlorine as hydrogen chloride, so each tonne of isocyanate comes with a large flow of HCl that must be sold, used or recycled.

  • 0.58 t HCl per tonne of MDI
  • 0.84 t HCl per tonne of TDI

The ratios follow from the chemistry: each isocyanate group made releases two molecules of HCl. The HCl can be sold or used, or oxidised or electrolysed to make secondary chlorine for reuse.

Sources: IHS Markit (S&P Global)

3. HCl recycled to chlorine

Physical flow · Medium · HCl back to chlorine

HCl electrolysis splits the acid back into chlorine and hydrogen, closing the chlorine loop at the isocyanate site and reducing the need for new chlor-alkali capacity and its caustic.

  • up to 30% energy saving of oxygen-depolarised cathode HCl electrolysis over the conventional process

thyssenkrupp nucera's process was optimised for isocyanate plants and runs in several large plants. Recycling uncouples part of isocyanate chlorine demand from caustic soda output, which matters where caustic markets are weak.

Sources: thyssenkrupp nucera; IHS Markit (S&P Global)

4. Price link: input

Cost and price · Strong · Both ways

Chlorine and electricity costs feed into isocyanate costs, and isocyanate demand supports chlor-alkali run rates near large complexes.

  • 0.23 monthly change correlation
  • 0.67 12-month change correlation
  • 0.44 fitted elasticity

The site uses an alkalies index as the chlorine proxy, since chlorine itself is little traded. The link is loose month to month but clear over a year; the low elasticity is consistent with chlorine being a modest part of MDI and TDI value.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. Isocyanates are among the largest chlorine outlets, but the chlorine leaves as HCl, so a complex's real chlorine need depends on how much HCl it recycles.
  2. Phosgene is made captively by the same few groups that dominate MDI and TDI, so new isocyanate capacity is also new chlorine demand in the same place.
  3. HCl recycling lowers dependence on chlor-alkali and its caustic, but adds power cost.

What to track

  • MDI and TDI prices and operating rates: Show demand for captive chlorine (Weekly · industry price reports)
  • Regional HCl prices near isocyanate hubs: Low prices raise the case for recycling (Monthly · industry reports)
  • New isocyanate trains announced: Each adds phosgene and chlorine demand on site (As announced · Wanhua, BASF, Covestro)

For policymakers

Key learnings

  1. Isocyanate plants need on-site phosgene, so siting and safety rules for phosgene and chlorine decide where they can be built.
  2. A new isocyanate complex creates local chlorine demand and an HCl stream that must be managed, which affects chlor-alkali planning and caustic balances.
  3. HCl recycling technology reduces waste acid and the caustic glut that new chlor-alkali capacity would bring.

What to track

  • Approvals for isocyanate and phosgene units: Signal future chlorine demand and HCl flows (As notified · environment and safety regulators)
  • Imports of MDI and TDI: Show demand served without domestic chlorine (Monthly · DGCI&S)

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Phosgene, Chemical Economics Handbook, S&P Global Commodity Insights
  3. Olin Corporation Form 10-K for fiscal year 2025, Olin Corporation (US SEC filing) (2026)
  4. PEP Review 2018-10: HCl ODC electrolysis, IHS Markit (S&P Global) (2018)
  5. Hydrochloric acid electrolysis, thyssenkrupp nucera