Sluggish Demand led to reduced Hexamethylene Diisocyanate Costs in Europe

The Hexamethylene Diisocyanate price trend showcased bearish movement in June 2024 as producers reduced their Hexamethylene Diisocyanate quotations notably by 16% to stimulate a sluggish market and improve offtakes amid subdued demand from buyers. The supply availability was ample to cater to the demand from the downstream Polyurethane segment. The downturns in the construction sector continued to persist as purchasing sentiment dwindled, which led to low demand for Polyurethane materials in the construction sector. At the same time, car sales in Germany fell by 2.7% in May 2024. Consequently, the consumption of Polyurethane foam fell from the Automotive sector, and orders diminished for PU component Hexamethylene Diisocyanate, keeping inventory levels steady across Europe.

Demand was sluggish for Hexamethylene Diisocyanate from the Polyurethane segment. The housing sector remained the weakest performer, although the rate of decline slowed to its lowest in eight months. Commercial building projects experienced a significant and consistent decline from the previous month. The primary factor contributing to the construction sector's ongoing challenges was the lack of new incoming projects. The sharp contraction in new orders intensified for the first time in seven months, indicating sustained deterioration in demand conditions.

The market experienced oversupplies of Hexamethylene Diisocyanate stocks due to depressed offtakes from buyers. At the same time, a decline of almost 3% in upstream Ammonia costs negatively impacted the Hexamethylene Diisocyanate production costs. Meanwhile, in June, operating rates remained stable to low at manufacturing facilities. The HCOB Eurozone Manufacturing PMI fell during June 2024 amid reductions in new orders, indicating a deterioration in manufacturing activities in the region. Simultaneously, cost support was firm on production costs of Hexamethylene Diisocyanate as the upstream Butadiene prices witnessed a nominal increase of 1% during the month amid moderate availability of supplies. It impacted the domestic production rates of Hexamethylene Diisocyanate.

According to ChemAnalyst, the Hexamethylene Diisocyanate FOB Hamburg quotations in Germany witnessed USD 4800/MT at the end of the second quarter of 2024.

As per the estimation, the Hexamethylene Diisocyanate prices would reduce further in the European region at the beginning of the third quarter of 2024. The demand for Hexamethylene Diisocyanate is likely to remain sluggish from the Polyurethane segment because of the introduction of Biobased materials and weak consumption of materials in manufacturing units during summer holidays. At the same time, the production costs of Hexamethylene Diisocyanate may decrease due to the anticipated reduction in cost support from upstream Crude Oil.