PU Resin Prices Drop in Europe and USA Amidst Weak Demand from Household Industries

The recent PU (Polyurethane) Resin price change in July 2023 resulted from the pessimistic demand in the downstream construction and household industry across the European and USA markets. On the European demand side, the demand momentum for PU Resin was triggered by the drop in the housing segment demand of the region coupled with uplifting interest rates by the European Central Bank. However, the PU Resin demand in the USA was concluded by the slump in the new offers from the domestic furniture and household segment coupled with weak international inquiries in the line of abundance availability of stocks across the nation in July 2023.

In the USA, the housing market is navigating a period of uncertainty in the PU Resin market as recent data reveals mixed signals about its health in the downstream market and significantly impacted the price of PU Resin in July 2023. The PU Resin market experienced a slight dip in construction in July 2023, reflecting its current instability, low demand, and high stocks. As per the Federal Reserve Bank, the downstream housing starts in the US witnessed an 8% month-on-month and 8.1% year-on-year decline in June 2023, and the complicated landscape of the housing market becomes clearer through the lens of home sales. The US Department of Commerce unveiled that after three consecutive months of recovery, new home sales in the US experienced a dip for the first time in June, and the existing home sales displayed a similar pattern and decreased PU Resin consumption in the US market. The housing market was suppressed by the consistent rise in mortgage interest rates since the Q2 of 2023. With the Federal Reserve's aggressive interest rate hikes over the past year to combat inflation, the US economy's sluggishness has pushed 30-year mortgage rates to two-decade highs. Consequently, the slump in the housing segment has resulted in a downward price trend for PU Resin throughout this month.

Beyond housing, the US mattress industry is also facing significant headwinds and contributed to the current PU Resin market momentum, as the anti-dumping duties imposed on mattresses from 14 countries, including major players like Mexico, the Philippines, and Spain. These measures have disrupted the industry's supply chain, substantially decreasing mattress consumption and related upholstered furniture.

The PU Resin prices in Europe were low during the first week of August 2023 due to ample inventories and pessimistic household and construction industry demand. Moreover, from the supply perspective, the feedstock TDI prices were on the southward side in the line of surged level of inventories and dropped downstream market momentum. A hike in the interest rate weighed on the housing market of Europe in July 2023 and primarily impacted the consumption of the PU Resin industry.

As per ChemAnalyst, the PU Resin price trajectory is projected to remain on the downward side in August 2023, along with the low downstream inquiries in the global market and ample availability of stocks. In addition, the price of the product might be affected by the US housing market during this time frame as the sector grapples with multifaceted challenges. Industry experts and policymakers will need to collaborate to restore stability and prosperity to this vital sector of the economy. On the upstream side, Feedstock TDI prices may dip in the US and European markets due to surplus supplies and weakening of consumption, which may further challenge the market in August 2023.