European PU raw material prices plunge

Polyurethane (PU) raw materials fell to a multi-year low in April, reversing the increase in March, because the coronavirus pandemic forced the plant to close, resulting in the cancellation and delay of extensive isocyanate and polyol orders and causing greater downward pressure on the industry .


When evaluating April contracts for polyols, TDI, polymeric MDI and pure MDI, since the demand has basically evaporated and most foam producers are currently closed, in some cases their discounts are as high as three digits. The industry expects that with the sharp drop in crude oil prices, upstream raw materials will be under greater pressure.


A European isocyanate and polyol distributor said: "No one buys anything."


Although everyone has been discussing lifting the blockade and restarting the factory, it is not clear how long it will take for the polyurethane market to return to normal, and the outlook for May is still clouded.


A European isocyanate producer said: "The government doesn't know ... our customers don't know, and our customers' customers don't know, everyone is waiting for news."

Aggregate MDI


April crude oil or aggregate MDI contract prices are estimated to be 1,150-1,290 euros / ton (free delivery). Western Europe prices hit a record low, with low-end prices falling by 140 euros / ton and high-end prices falling by 70 euros / ton.


Due to the general closure of automobile factories and the stagnation of construction demand in certain areas, the quotations have dropped significantly. The closure of the factory has resulted in the cancellation and delay of a large number of orders this month. In some cases, the manufacturer reserves inventory for customers.


A European isocyanate distributor said: "No one will enter the market." People now only buy what they need. They do not intend to have high inventory. "


Most MDI producers in the region are now operating at the lowest operating rate. Although some factory restarts have been discussed, the market is expected to face continued downward pressure in May, especially due to the expected imports from China and South Korea.


A European isocyanate distributor said: "Everything is slow now."


Pure MDI


The contract price of pure MDI in Western Europe in March was estimated to be 1,650-1,950 euros / ton (free shipping), the low price was reduced by 350 euros / ton, and the high price was reduced by 250 euros / ton, which is currently at the lowest level since June 2010 .


Earlier this month, in transactions negotiated before the price of raw materials plummeted, delayed delivery, growth of more than 10%, and discounts all appeared. However, the price of pure MDI showed a greater decline.


An Asian isocyanate exporter who exports to Europe said: "Most customers stop pure MDI. This makes the price drop sharply."


Demand for pure MDI in major markets such as Italy and Turkey has collapsed because coronavirus-related blockades and precautions have forced shoe and car factories in the region to stop production.


Buyers are also highly vigilant due to the relatively short shelf life of pure MDI. Unconfirmed reports say that production problems have affected production at the Borsodchem plant in Kazincbarcika, Hungary. It is believed that the output of most producers has been reduced to a minimum.


TDI


The April TDI Western European contract price range is estimated to be 1,450-1,600 Euros / ton (free shipping), the low-end price has dropped by 170 Euros / ton, and the high-end price has dropped by 110 Euros / ton, the lowest level since September 2005.


Although there was occasional news that the contract was extended, the quotation indicated that the decline was even greater.


A European isocyanate producer said: "All [foam producers] are still closed, there is no restart this week, stores are closed, large shopping centers are closed, and [automotive industry] demand is falling."


The suspension of business led to the cancellation and delay of a large number of orders, especially due to concerns about supply security, some buyers filled up their inventory in late March.


The manufacturer added: "We have to face reality. In many cases, the initial estimates and commitments have completely changed. No one can tell us how much they want, and some customers simply don't want it."


A small amount of polyurethane products will enter the healthcare field, including hospital bedding.


Although BASF permanently closed its TDI plant in Schwarzheide, Germany at the end of March, there is no shortage of raw materials because manufacturers in the region have minimized production.


The aviation industry is waiting for new news when the blockade will be lifted, but the outlook remains clouded, and demand is expected to remain sluggish by May.


A TDI and polyol buyer from Europe said: "We are all tired of this terrible situation. We only sell products for small batches of small customers and only one day a week."


"If the situation in May remains the same, I think I won't buy anything."

Polyol


The April polyol contract price in Northwest Europe is estimated to be 1,400-1,550 euros / ton (free shipping), with a lower end of 200 euros / ton and a high-end price of 145 euros / ton. The price is currently at its lowest level since February 2010.


Although there are occasional reports of contract extensions, most of the feedback and absolute quotations indicate a greater decline.


Bedding and furniture stores and car factories are still closed in the area, so most flexible foam producers are also closed. The closure of these factories led to the cancellation and delay of a large number of orders this month, especially since some buyers filled their inventory in March.


A European polyol producer said: "After people thought they would encounter logistics problems, they canceled a considerable order in April."


A small amount of polyurethane products will enter the healthcare field, including hospital bedding.


The aviation industry is waiting for new news when the blockade will be lifted, but the outlook remains clouded, and demand is expected to remain sluggish by May.


Although the supply of most polyol producers has decreased, the slow demand and the collapse of crude oil prices are expected to maintain downward pressure on the market.


A European polyol producer said: "Of course, our inventory is increasing but the situation is still unclear. We will prepare for economic recovery."


MDI is mainly used in polyurethane foam, accounting for about 80% of global consumption. Rigid foam is the largest use of MDI, mainly used in construction, refrigeration, packaging and insulation. MDI is also used to make adhesives, elastomers, adhesives, sealants, paints and fibers.


TDI is mainly used to produce PU flexible foam for cushions, mattresses and car seats.


Polyols usually react with isocyanates to form PU. PU can be used to make foam insulation, elastic soles, fibers and adhesives for mattresses, household appliances (refrigerators and freezers), household and car seats.