At the beginning of the final quarter of 2024, the Hexamethylene Diisocyanate (HDI) market continued to showcase bearish sentiments in Europe like the past couple of months and market players again reduced their quotations. Orders for HDI were low from buyers due to sluggish material consumption in the construction sector. The eurozone construction sector saw a continued decline in activity at the start of Q4 2024, though at the slowest pace since December 2023. This downturn was driven by a sharper fall in new orders and a broad-based contraction across housing, commercial, and civil engineering. Employment and input buying decreased, while business confidence hit its lowest level this year. Demand remained weak, especially in Germany, France, and Italy, with Germany seeing the sharpest decline. Cost pressures eased slightly, but input price inflation was still present, particularly in Germany. Despite improved supplier performance, delivery times were reduced less than in previous months. Overall, construction firms remained pessimistic about the future, with sentiment at its lowest in 2024.

Meanwhile, the operating rates were moderate at HDI manufacturing units. At the beginning of October, Crude Oil prices witnessed price gains amid speculations around the affected supplies from the Middle East region due to rising tensions between Iran and Israel. It impacted the availability of HDI key upstream Butadiene supplies. However, Crude Oil and upstream supplies improved in the second half of the month and negatively impacted the upstream cost support on the production costs of HDI. Simultaneously, October PMI survey data revealed a decline in euro area business activity for the second consecutive month, driven by weakening demand and falling new orders for the fifth month. Input costs rose at their slowest pace since November 2020, with manufacturing output continuing its sharp decline, though at a slightly softened rate. At the same time, the inventory levels rose in the regional market as export rates witnessed a decline in October 2024.

According to ChemAnalyst data sources, Hexamethylene Diisocyanate (HDI) FOB Hamburg prices in Germany hovered at USD 4200/MT at the end of October 2024 after witnessing a monthly decrease of 4.5%.

As per the estimation, HDI prices will increase in the European region during the mid-Q4, 2024. HDI production rates are expected to decrease during the peak winter season, as colder temperatures and operational challenges may slow output. Additionally, production costs could rise due to anticipated escalations in upstream prices, along with variable costs due to higher energy prices during winter.  At the same time, HDI procurement activities are expected to pick up as market players stockpile materials in anticipation of demand fluctuations. The Polyurethane segment is likely to see improved demand, driven by the stressed availability of bio-based materials in the market, which could push market participants to seek petrochemical-based alternative isocyanate sources like HDI.