In February 2025, Toluene Diisocyanate (TDI) market witnessed bullish sentiments in the European region due to an increase in consumption rates from the Polyurethane segment as PU foams are used to produce automotive parts, insulation, and construction materials. At the same time, the weather conditions like freezing temperatures resulted in delays and disruptions at the European ports and TDI supplies remained low to the buyers.

The TDI market saw steady growth in the European region during February 2025, amidst strong demand for end-use materials from the construction and automotive sectors. The automotive industry experienced a 13% increase in production and a 19% rise in exports despite a slight drop in new car registrations.

On the contrary, the construction sector witnessed sluggish demand due to rise in inflation, increasing materials costs, and high interest rates. The growth in the automotive industry and the consistent demand for TDI polyurethane materials resulted in bullish market conditions.

Meanwhile, TDI production rates in Europe were hampered by rising crude oil prices, attributed to supply disruptions, and a Ukrainian drone attack on the Russian pipeline that cut oil flow. Geopolitical tensions, along with high demand of crude oil derivate fuel as an alternative to natural gas further strained the availability of feedstock Toluene supplies for TDI production. As a result, TDI production rates remained stable, though on the lower side, indicating a contraction in the Eurozone’s manufacturing sector. The ongoing fluctuations in crude oil prices, resulted in pressure in feedstock Toluene costs, and raised the production costs of TDI.

Simultaneously, the European ports faced significant disruptions due to the severe weather conditions and labor strikes. Storms and flooding caused port closures and delays, while strikes at major ports like Rotterdam and Le Havre caused congestion and increased waiting time for the vessels. High yard utilization further strained operations, raising freight charges, and extending transit times. In response, shipping companies had to reroute vessels around the Cape of Good Hope to avoid the affected areas, which added complexity to delivery schedules. Businesses are required to monitor the port congestions to ensure smooth supplies to the regional market.

The TDI market is anticipated to keep growing and demand is likely to increase from the Polyurethane segment to insulation materials and PU foams. Meanwhile, the market expansion will be influenced by ongoing environmental regulations and the focus on sustainability as companies are adopting responsible production practices. However, fluctuation in demand and supply disruptions might result in production challenges, amid weak availability of feedstock supplies. The downstream PU segment is expected to see increased orders by the end of Q1, while productions might remain low due to the stressed availability of feedstock supplies. It will impact the regional output rates.

Moreover, the market is likely to experience increased competition as an increase in TDI offtakes in the international market, would further limit the supply availability, leading to TDI price increases in the upcoming weeks.