Demolishing Price Movement of Polyol in Europe Amid Pessimistic Market Sentiments

The Polyol market continued to showcase pessimistic sentiments in the European market during November 2023, and prices have dropped almost 4.5% since the end of the week of October 2023. The previous inventories were excessively available in the regional market amid low offtakes from the Polyurethane segment and textile sector. According to sources, the offtakes of Polyol remained depressing in October 2023 from textile industries amid a decline in retail sector sales by 0.3% in September 2023. It raised the inventory levels of Polyol in the regional market. Similarly, orders from the textile sector are still depressing due to the subsequent decline in the retail sector sales index during October 2023.

The Eurozone's manufacturing Purchasing Manager's Index fell again during October, indicating a further decline in the manufacturing sector activities. With the drop in the PMI index, the operating rates were reduced in the regional industries, and supply rates remained moderate in the regional market. At the same time, trading activities remained low due to public holidays in Northwest and Southwest Europe during the first week of November 2023.

Simultaneously, Polyol demand remained depressing for the downstream polyurethane industries due to a drop in regional PMI and the switching interest of downstream buyers towards bio-based polyurethane materials. At the same time, the declining trend in the Automotive industry kept the inquiries sluggish for polyurethane foam materials from the Automotive sector, and offtakes for Polyol remained feeble from the manufacturing sector.

Concurrently, the upstream cost support was low on the feedstock Propylene Oxide from the past few weeks amid the availability of stocks and declined demand from the buyers. It reduced Polyol's production costs. As per the ChemAnalyst data sources, the Polyol prices in Germany hovered at 1800/MT at the end of the third week of November 2023.

As per the assessment, the Polyol market will remain bearish amid the surplus availability of materials in the market. The reason is the shift in buyer interest towards biobased Polyurethane materials, which negatively impacts the demand for traditional petrochemical-based Polyurethane materials and feedstocks. Covestro has announced that it is expanding its Platilon brand films capacity, a biobased thermoplastic Polyurethane in Bomiltz, Germany. A bio-based hot-melt adhesive film on castor oil will be used to make TPU films. The biobased TPU films can be widely used as Polyurethane foam to fabricate car interiors, outdoor clothing, parts of electric appliances, and foam strays for the construction sector. It will replace the commercial petrochemical-based Polyurethane and Polyols in the manufacturing and construction sector, and Polyol consumption rates will decline in the future.