Stability in Supply-Demand Ratio causing the MDI Prices to remain Steady in Europe

The MDI (Methylene Diphenyl Diisocyanate) prices remained unchanged by European suppliers since the beginning of the third quarter of 2024 amid equilibrium in demand-supply dynamics. The MDI supply availability was ample to cater to the demand from the downstream Polyurethane segment. Meanwhile, automotive sales improved in Germany during June 2024 by almost 26% from the previous month. However, in the first half of 2024, electric vehicle (EV) sales in Germany declined by 16.4%, with Tesla experiencing a substantial sales drop of 41.6%. Consequently, the consumption of Polyurethane foam remained average in the Automotive sector, which stabilized the orders for PU component MDI, keeping inventory levels steady across Europe.

Additionally, the downturns in the construction sector persisted as purchasing sentiment weakened, resulting in diminished demand for polyurethane materials in the industry. The housing sector continued to lag behind other industries, though it showed some improvement as the rate of decline slowed to its lowest point in eight months. Despite this, commercial building projects experienced a marked and steady drop compared to the previous month. The construction sector's persistent difficulties were primarily due to a shortage of new projects. Additionally, there was a notable increase in the contraction of new orders, which had worsened for the first time in seven months. It indicated that demand conditions in the sector are continuing to deteriorate. It negatively impacted the consumption of MDI from PU-based construction material producers.

At the same time, the market experienced consistent supplies of MDI stocks amid shifting offtakes from buyers. Meanwhile, operating rates remained stable to low at manufacturing facilities, and the HCOB Eurozone Manufacturing PMI fell during June 2024 amid reductions in new orders, indicating a deterioration in manufacturing activities in the region. Simultaneously, the cost support was stable from feedstock Aniline due to intermediate production rates because of the moderate availability of Nitric Acid amid shifting demand from fertilizer manufacturers at the beginning of the quarter. However, cost support eased from feedstock Benzene during the past couple of weeks. It negatively impacted the production costs of MDI.

According to ChemAnalyst, the MDI Polymeric Grade FD Hamburg quotations in Germany witnessed USD 2500/MT at the end of the first half of July 2024.

As per the estimation, the MDI prices would incline in the European region during the first half of the third quarter of 2024. The demand for MDI in the global market would steady within the Polyurethane segment due to the rising need for Polyurethane leather by cell phone and cover manufacturers, driven by its durability. Meanwhile, the MDI supply availability may remain moderate to sluggish due to reduced operational rates at manufacturing units amid labour shortages during the summer holidays in the European region.