MDI North America
Supply in the North American MDI market has been healthy over recent months, despite recent reduced supply, and this situation continued into September. Demand in Q3 is weaker than in previous years but has reportedly rebounded. Housing and construction continue to underperform. Demand from furniture and bedding has been weak, but automotive is healthy. Destocking has been an issue in the MDI market, but an uptick in demand in July and August could signal an end for destocking.
Supply in the European MDI market was plentiful for most of Q3, though some planned turnarounds took place in the summer and other producers reduced supply because of market weakness. Inventory was high and MDI pricing has been greatly discounted to stimulate sales. Imports from Asia continued to be high, adding more negative pressure on prices. Market players reported week demand in July and August, and this continued in September. Inflation and high interest rates remained a problem, and consumer spending was low.
Chinese domestic MDI prices fluctuated for most of the quarter because of supply shortages. Average operating rates remained around 60% in July and August. Demand saw only limited improvement. Downstream customers were willing to replenish their positions. However, as the market experienced weak prices in mid-July, some users chose to improve their positions. Subsequently, purchasing power weakened, and demand capacity was constrained, resulting in insufficient downstream buying activity. In August the market started to show upward momentum, with prices gradually probing higher. But downstream clients remained unwilling to place orders, leading to a somewhat despondent market atmosphere.
TDI North America
TDI supply in North America has been lengthy for months, especially as demand was muted and this is not expected to change in the short term. Demand was reportedly stable-to-soft for most of Q3. The construction sector saw improvement in July and many expect an end to destocking. The comfort sectors remained quiet and the automotive sector healthy.
European TDI demand usually slows during August when downstream plants in southern Europe shut for the summer holidays. The rest of Europe and Russia usually remain stable, but that was not the case this year. Demand from foam buyers into furniture was very quiet. Automotive performed reasonably, but not enough to offset weak demand from other sectors. TDI supply in Europe is thought to still be lengthy. Although some producers still have reduced operating rates, demand is not sufficient to change market dynamics and prices saw hefty declines in the summer.
Supply played a crucial role in China’s TDI market dynamics during July. In the first half of August, major TDI plants in Shanghai were under maintenance and had not yet resumed production. Later that month, these plants gradually recovered, leading to an improved start rate. Manufacturers maintained a positive outlook, leading to increased turnover in mid-August. Production at the Shanghai BASF plant was stabilised after completion, while Yantai Wanhua was still undergoing an overhaul programme, and further updates were awaited.
Downstream markets saw the traditional weaker demand of off-season. Rising market prices gave some traders a positive sentiment, but downstream users were unwilling to replenish inventory. In August, downstream users showed caution, waiting for the settlement price and making purchases primarily for immediate use.
Polyether Polyols North America
Supply/demand for polyether polyols remains balanced in North America, with no reported problems with availability because of muted demand. Demand was reported to be stable-to-soft into August. Demand for rigid polyether polyols for construction and appliances was weak but showed signs of rebounding. Demand into auto applications is reportedly healthy. Demand for flexible polyether polyols into furniture and bedding remained quiet.
Polyether Polyols Europe
The European polyether polyol market is still under pressure from low demand. Demand in July and August weakened and volumes were still below previous years. Construction is described as soft but the automotive industries continue to show some demand. Comfort industry levels are reportedly below typical seasonal demand. Supply is balanced and availability is reported to be good.
Polyether Polyols China
In China, downstream experienced a lack of purchasing power in the summer. There was some late follow-up demand, but towards the end of the month, the downstream market mostly bought according to immediate demand, with most users maintaining low inventory levels and opting for just-in-time replenishment.
Regina Sousa is a senior consultant at Tecnon OrbiChem