A slight decline in European MDI prices amid weak demand and slow market offtakes

In the European region, the regional Methylene Diphenyl Diisocyanate (MDI) producers decreased their quotations inconsiderably by 0.3% during the prime month of 2024 amid moderate to low demand from buyers and affliction in production and supply chain activities.

As per the sources, at the beginning of 2024, the Eurozone's manufacturing Purchasing Manager's Index indicated some improvement and rose marginally, indicating a slowdown in the reduction of the manufacturing sector activities but remained below 50 amid a decline in new orders and output rates. The market did not showcase any significant improvement in inquiries for MDI amid the ongoing economic slowdown in the region. The consumption rates remained moderately low in the Polyurethane segment, and MDI inventory levels remained firm in the regional market.

Reports have highlighted that the European Wood furniture market experienced adverse effects resulting from the burst of a housing bubble. This economic downturn led to a decrease in the demand for wood furniture in the region. Consequently, there was a decline in orders for Polyurethane foam from the manufacturing sector, and the consumption rates of MDI (Methylene Diphenyl Diisocyanate) witnessed a reduction over the past month. On the contrary, the demand for Polyurethane and Polyurethane components slightly picked up the pace in the Automotive industries as Tesla and BYD reduced their prices, which led to an escalation in orders for electric vehicles.

The upstream cost support on MDI remained moderate as Benzene prices increased, especially in the second half of the month amid an escalation in upstream Brent Crude Oil prices because of supply chain disruptions along with ongoing geopolitical tensions and supply concerns after a missile attack a ship sailing through the Red Sea in the Middle East region. The ships were rerouted to the Cape of Good Hope, which raised the ship traffic and afflicted the upstream Crude Oil supplies and productions of MDI.

On the contrary, the decrease in the feedstock Aniline prices as supplies were excessively available amid sluggish offtakes from the buyers and reduced production costs due to firm availability of upstream Nitric Acid supplies amid a reduction in demand from fertilizer manufacturers and a noticeable decline in the upstream Ammonia prices. It reduced the production costs of MDI.

At the end of January 2024, the MDI Polymeric Grade FD Hamburg quotations in Germany witnessed USD 2115/MT, according to the ChemAnalyst data sources.

As per the estimation, the MDI price trend will shift, and prices will increase in the European region in the middle of the first quarter of 2024. The reason is the increasing upstream prices amid supply chain disruptions and escalation in freight charges, impacting the production rates of MDI.