The Polyurethane (PU) Resin market has witnessed a bearish situation in the Asian and North American regions throughout October 2023. The current market of PU Resin was largely driven by the deteriorating market situation of feedstocks Methylene Diphenyl Diisocyanate and Toluene Diisocyanate, which eased production costs and the sluggish demand in the downstream paint manufacturing sector from the construction industry and weak demand for international exports.

Prices of PU Resin (Rheology Modifier) depreciated marginally by 1.2% in the US market owing to the sharp depreciation in the prices of feedstocks Methylene Diphenyl Diisocyanate and Toluene Diisocyanate which declined by almost 11% and 5%. Depreciating prices of upstream Crude Oil which declined by more than 1% due to relief on sanctions imposed upon Venezuelan Crude Oil as OPEC+ countries continue to cut production rates. Demand for PU Resin from the downstream construction industry was moderate as the construction industry struggled to perform. Moreover, a further contraction in new business hampered output growth in October, preventing PU Resin's consumption as the paint industry remained subdued. Customer Demand and Purchasing Power Dampen as New Orders See a Slight Decline for the Third Consecutive Month Amid Rising Interest Rates and Inflation. Mortgage rates across the United States continued to climb, with the latest mortgage rates being recorded at 7.57% at the week ending October 27, 2023, up from 7.49% for a 30-year fixed contract term, according to Freddie Mac (Federal Home Loan Mortgage Corporation). Consequently, this negatively affected the construction industry as the pool of prospective homebuyers diminished, weakening the demand for PU Resin. Moreover, investor confidence also had a negative effect as the suspicions of the United States being involved in the Israel-Hamas war loomed. This consequently led to the investors seeking out the safety of the bond market, sending the yield on the 10-year Treasury note falling earlier this week.

In the Asian market, the prices of PU Resin (Foam Grade) also witnessed a bearish market situation, with the prices falling by almost 2% in Japan, which was driven by low orders of exports to the United States. This consequently led to the depreciation in the prices of PU Resin (Foam Grade) as the effects of economic uncertainties largely loomed across the United States. The halting of construction activities also had a detrimental impact on the furniture industry as stocks of unsold furniture continued to pile across the United States, further depreciating the prices of PU Resin. Demand for PU Resin from the Southeast Asian market was also not healthy, as evidenced by restrictive purchasing sentiments across China. This economy is expected to enter a state of deflation.

However, prices of PU Resin are expected to witness an upward trend in the upcoming months in the North American and Asian markets as prices of upstream Crude Oil are likely to increase due to a strong demand for LNG for heating purposes. Consequently, this is expected to increase the prices of feedstocks Methylene Diphenyl Diisocyanate and Toluene Diisocyanate, which is further expected to increase the production costs of PU Resin. Demand for PU Resin from the downstream furniture industry is likely to strengthen as the festive months of December and January are near, which is likely to improve purchasing activities.