European MDI Prices Take a Dip in November 2023 Amidst Slow Market Offtake

In November 2023, the Methylene Diphenyl Diisocyanate (MDI) prices showcased a bearish trend, and prices fell 6.2% during the month amid low offtakes from domestic buyers.

The Eurozone's manufacturing Purchasing Manager's Index (PMI) has consistently diminished in the past few months, and it declined again in November 2023, indicating further contraction in the manufacturing sector activities in the region. The regional manufacturers reduced their operating rates with the drop in the PMI index, and supply rates remained moderately low in the market amid the previous availability of the MDI stocks in the regional market. At the same time, MDI offtakes from the downstream polyurethane industries were sluggish amid a decline in trading activities at the beginning of the month due to public holidays in Northwest and Southwest Europe.

The demand for MDI from the downstream polyurethane industries remained low due to the switching interest of downstream buyers towards bio-based polyurethane materials. Furthermore, Germany's passenger car sales index fell by 5.7% during November 2023, and this declining trend in the Automotive industry kept the MDI inquiries sluggish for the production of Polyurethane foam materials from the Automotive sector.

At the same time, the decrease in upstream Brent Crude Oil prices was due to resumed refinery operations in the US. It improved the feedstock Benzene and Aniline availability in the market, and cost support eased MDI's production costs during the month.

According to the sources, the major polyurethane component and MDI manufacturer Covestro AG announced on 13 October 2023 that it is expanding the capacity of Platilon brand films, a biobased thermoplastic polyurethane, in Bomiltz, Germany. As a raw material, a bio-based hot-melt adhesive film on castor oil will be used to make thermoplastic polyurethane foam films. It will replace the commercial petrochemical-based Polyurethane and Polyols in the manufacturing and construction sector as the biobased Thermoplastic Polyurethane foam films can be widely used to Polyurethane foam to fabricate car interiors, outdoor clothing, parts of electric appliances, foam strays for the construction sector. It will replace the traditional petrochemical-based MDI in the market, and its consumption rates will decline in the future.

The MDI prices in Germany hovered at USD 2157/MT at the end of November 2023, as per the ChemAnalyst data sources.

As per the ChemAnalyst assessment, the MDI prices will decline again towards the end of the year. The reason is the depressing demand from the buyers and adequate availability of stocks in the regional and international markets. Manufacturing activities generally remain low during peak winter as people plan for the New Year holidays. Buying activities generally remain feeble for durable goods from the retail sector. It will diminish the isocyanate consumption rates from the Polyurethane segment.