Declining Hexamethylene Diisocyanate Prices in Europe Amid Softened Demand and Improved Supplies

The price of Hexamethylene Diisocyanate has consistently declined in the European region for the past year. In the past couple of months, supplies improved in the market amid destocking practices by producers amid softened global demand from end-users. The available inventory levels were adequate amid limited procurement activities from buyers. In June, the increase in bank interest rates by the European Central Bank resulted in buyers becoming more cautious when making purchases, leading them to avoid any unnecessary trading activities.

Orders for Hexamethylene Diisocyanate were low the due to the excess availability of supplies. In the past few months, an increase in cheap Asian goods imports and a decrease in Europe's production and export rates in seen prominently in the region. As per reports, the Eurozone manufacturing Purchasing Manager's Index is consistently declining for the past three months indicating contractions in the manufacturing sector activities.

Consumption rates of Hexamethylene Diisocyanate were sluggish from downstream Polyurethane sealants and coatings producers due to sluggish activities in the construction and electronics industries. Simultaneously, the orders for Polyurethane foam were underwhelming from the furniture industry and automotive manufacturers. Furthermore, depressed activities in the textile sector decreased the demand from Caprolactam manufacturers in the Q2 of 2023.

At the same time, the feedstock Butadiene prices declined amid weak demand from buyers and reduced cost support from upstream Ethylene. It decreased the upstream cost support on Hexamethylene Diisocyanate. Simultaneously, upstream Ammonia prices contracted during the past two quarters in the region amid weak demand from agrochemical consumers and producers. Furthermore, the decrease in the feedstock Adipic Acid prices due to depressed demand from the textile industries and the availability of supplies reduced the production costs of Hexamethylene Diisocyanate. Moreover, the decline in input and energy prices due to decreased Natural Gas prices amid subdued demand and high inventories eased the cost support on Hexamethylene Diisocyanate.

As per the ChemAnalyst database, Hexamethylene Diisocyanate prices in Europe have decreased by almost 20% in the past year. At the end of July 2023, the Hexamethylene Diisocyanate prices in Germany settled USD 5827/MT, while last year, during July 2022, the quotations were USD 7250/MT.

As per the estimation, "the Hexamethylene Diisocyanate price trend will remain bearish in Q3 and improve in Q4 of the year. The anticipated increase in demand for Polyurethane foam in the manufacturing sector will increase the demand for isocyanate. Simultaneously, the increase in the consumption rates of Natural Gas will raise the upstream Ammonia and input costs, and the price trend of Hexamethylene Diisocyanate will rebound in Q4."