Declining Toluene Diisocyanate Prices in Europe Amid Insufficient Demand

In the European market, the Toluene Diisocyanate market showcased bearish sentiments during September 2024. The Toluene Diisocyanate prices witnessed a slight decrease of 1.2% from August 2024. The demand for Toluene Diisocyanate in the polyurethane sector remained average, primarily due to moderate material consumption in the construction industry. The eurozone construction sector continues to experience a downturn as of mid-Q3 2024, with a significant drop in new orders resulting in decreased construction activity, ongoing job cuts, and reduced purchasing. This decline is widespread across major eurozone economies and all construction sectors. The HCOB Eurozone Construction PMI Total Activity Index held steady at July’s six-month low, indicating 28 consecutive months of reduced activity. Notably, the housing sector recorded its steepest decline since April 2020, while the commercial and civil engineering sectors also faced significant reductions.

Simultaneously, the consumption of Polyurethane materials was depressing in the Automotive sector. Consequently, in September, Germany's PMI Output Index fell for the fourth straight month, reaching its lowest level since February. This decline signals a considerable contraction in overall output for goods and services. The manufacturing sector faced an intensified downturn, with goods production experiencing its steepest decline in a year, as indicated by a notably low index score. Additionally, the Consumer Price Index (CPI) for the Euro Area rose to 126.74 points in August 2024, up from 126.54 points in July, indicating a notable increase, reflecting a continued upward trend in consumer prices and buyers cautiously made their purchases.

Previously, in August, the supply availability was moderate due to hampered production rates amid the low availability of feedstock supplies and intermediate operational rates due to labor deficits in the region during regional summer holidays. Concerns over a potential recession in the US have impacted the international crude oil market and refinery operations, causing a shortage of feedstock Toluene, which resulted in persistently low production rates of Toluene Diisocyanate. However, at the beginning of the month, the Toluene Diisocyanate production rates improved due to the increased availability of feedstock Toluene supplies driven by improved refinery operations and Crude Oil availability amid a resumption of Crude Oil supply from Libya in September 2024. The Toluene Diisocyanate inventory levels improved in the market due to the resumption of manufacturing activities in the region after the summer holidays.

According to the ChemAnalyst data sources, Toluene Diisocyanate (T80) FD Hamburg prices witnessed USD 2470/MT, at the end of September 2024.

Anticipations are that the Toluene Diisocyanate price market sentiments will alter, and the prices will incline in the European market at the beginning of the final quarter of 2024. The demand for Toluene Diisocyanate is likely to increase from the PU segment due to the anticipated increase in consumption of PU foams and adhesive from the furniture manufacturers to mitigate retail sector demand during black Friday sales. At the same time, production costs of Toluene Diisocyanate might incline due to the anticipated increase in feedstock Toluene prices.