Insufficient Demand Causing a Decline in European Polyol Prices

In the first half of August 2024, Polyol prices witnessed a decrease of 1.2% due to a decline in demand for end-use Polyurethane materials in the construction sector in the European region. The orders for Polyol to produce polyurethane materials remained sluggish from the downstream construction sector. In July, the eurozone construction sector remained in contraction as activity dropped significantly. The pace of decline quickened to its fastest rate in six months, primarily due to substantial reductions in housing activity, which was the weakest segment. Weak demand led to a sharp drop in new business, increasing job losses, and reduced input purchasing and subcontractor use. Despite this, cost burdens rose only modestly. The Eurozone Construction Purchasing Manager’s Total Activity Index fell in July from the previous month, reflecting a steep decline in total output. The downturn was widespread across the eurozone, with France experiencing the most significant drop since January.

Simultaneously, the operating rates were moderate at the regional Polyol manufacturing units based on the demand from the market, and the Eurozone Manufacturing PMI Output Index witnessed another decrease in July 2024, marking the lowest level recorded in the past seven months, indicating a notable decline in manufacturing output across the Eurozone. Consequently, Polyol exports were low to the importers, and the sub-index for European exports dropped in July, marking its fifth consecutive month of decline. However, the Europe Imports sub-index was firm and increased during the month. Simultaneously, cost support from Polyol’s key feedstock, propylene oxide, weakened as upstream propylene and crude oil prices dropped, influenced by reduced transportation activity and lower fuel consumption during the summer holiday season in the region. It negatively impacted Polyol production costs. According to the ChemAnalyst data sources, Polyether MW 3000, μ 400-650 FOB Hamburg quotations witnessed USD 1620/MT in Germany at the end of the first half of August 2024.

Meanwhile, in the United Kingdom, the orders for Polyol to produce polyurethane materials remained steady for the downstream construction sector. The construction sector witnessed significant growth in the United Kingdom at the start of July, with notable increases in activity and new orders. Construction firms responded to rising workloads by expanding their purchasing and staffing.

As per the estimation, the Polyol price trend is likely to alter, and prices will increase in the European market. The production costs for Polyol might elevate due to an expected increase in its feedstock Propylene Oxide prices. The demand from PU manufacturers for construction materials is likely to remain steady. As a result, market players might raise the Polyol prices to enhance their profit margins.