Rising Feedstock Prices in Asia Alters Polyurethane Resin Prices in the USA

The market situation for Polyurethane Resin largely displayed a bullish trend in the US market mainly due to increased production costs in the exporting Japanese market, and a high demand from the furniture industry despite the performance of the construction sector remaining largely poor.

Prices of Polyurethane Resin have increased by almost 2% in the exporting Japanese market primarily due to increments in the prices of feedstocks Methyl Diisocyanate (MDI) and Toluene Diisocyanate (TDI) which increased production costs. MDI and TDI are primarily imported from South Korea and due to a healthy demand from the polymer industry in South Korea, which consequently production costs in Japan. Industrial activities in Japan remained largely moderate which kept the current production rates constant.

Demand for Polyurethane Resin in the US market was reported to be high as purchasing sentiments in downstream furniture industry were largely positive owing to the advancing festive season, despite the construction industry performing poorly. This was clearly indicated by retail giants across the United States such as Walmart and Best Buy offering discounts to further improve purchasing activities amidst the largely positive sentiments. With enough inventories of Polyurethane Resin not being generated in the Japanese market, in the face of increased demand in the importing US market, this prompted the prices of Polyurethane Resin to increase in the USA.

The construction industry however did not perform well in the US market as evidenced by construction of median size houses and single-family homes both observing a declination, despite mortgage rates retreating from 7.76% to 7.22% in November 2023, according to Freddie Mac. This consequently led to marginal inclination in the prices of Polyurethane Resin in the US market, instead of a sharp bullish market. Easing prices of upstream Crude Oil, which depreciated by almost 8% in November 2023 did not have any effects on the production costs of Polyurethane Resin. In the construction sector, the demand for Polyurethane Resin was recorded to have only originated from the commercial building segment which was the only segment where business sentiments were recorded to be in the positive territory.

Overall, the prices of Polyurethane Resin are expected to be driven by the prices of upstream raw materials in the overall Asian market under the expectations of the increase in demand from Thermoplastic Elastomers, which is expected to increase production costs of feedstock TDI in the Japanese market. This is expected to result in expensive imports of Polyurethane Resin in the US market.