European Polyol Prices Tumble in Mid-October Amidst Sluggish Demand

The Polyol prices continue to showcase bearish movement in Europe during the first half of October 2023 amid low offtakes due to sluggish manufacturing activities in the Polyurethane segment and declined retail sector sales.

The previous inventories of Polyol were excessively available in the regional market amid a decline in demand from buyers due to a rise in inflation and no improvement in offtakes from buyers. The Polyol consumption rates remained low from the domestic buyers due to the decline in the retail sector sales index by 0.8% during the previous month. Consequently, the downstream Polyurethane segment's demand and procurement activities remained sluggish. As per the sources, the hike in European Central Bank interest rates towards the end of September 2023 resulted in a decline in demand from buyers, causing a slowdown in the Eurozone growth. As of September 2023, the Eurozone manufacturing Purchasing Manager's Index experienced a slight decline, staying below the 50 mark. This suggests a contraction in manufacturing sector activities. Consequently, in the first half of October 2023, the Polyol prices decreased by almost 5% in the European market.

On the contrary, the availability of Polyol upstream Propylene was low in the region due to plant shutdown activities. In early September 2023, there were unplanned plant shutdowns at BP in Gelsenkirchen-Horst. This had an impact on the availability of upstream Propylene and caused disruptions in Polyol production rates. Additionally, the cost of feedstock Propylene increased due to rising Brent Crude Oil prices, driven by high demand and production cuts by Russia and OPEC+.

According to the ChemAnalyst data sources, the Polyether Polyol MW 3000, μ 400-650 FOB Hamburg discussions in Germany assembled at USD 2080/MT.

As per the estimation, the Polyol price trend will likely remain persistent in the Eurozone in the upcoming month of 2023. In September 2023, a decline in Electric cars was seen for the first time in the year as the subsidies given by the European Government on the purchase of electric vehicles ended during the month. The demand for Polyurethane foam in the Automotive sector for seats and covers will remain low for the next manufacturing session, i.e., quarter 4 of the year. It will decline the orders for Polyether Polyol during the upcoming weeks. Furthermore, the introduction of bio-based Polyurethane is receding the demand for synthetic Polyol and its petrochemical feedstock demand and consumption rates in the regional market in the end-user industries.