German Polyol Prices Decline Amid Slow Consumption from Polyurethane Manufacturers

The price trend of Polyol remained persistent in Germany during September 2023 as suppliers gradually reduced the prices in the past weeks due to the firm availability of imported material and no significant improvement in consumption rates from Polyurethane manufacturers.

As per the sources, the retail sector sales in August 2023 fell by 0.8% from the previous month. It negatively impacted the orders in the manufacturing sector during September amid high inflation in the region. The Eurozone manufacturing sector index continued to drop again during September 2023, indicating the poor performance of the manufacturing sector during the month. The slowdown in the region's economy remained persistent as the orders were depressing from buyers amid feeble inquiries of Polyol from the Polyurethane segment. With the drop in the Purchasing Manager's Index, the manufacturing activities remained low and negatively impacted Polyol's consumption rates from buyers during the regional summer holidays.

The previous inventories of Polyol were adequately available, and no improvement in offtakes was seen in the market. Meanwhile, the increased import of Polyol from China at lower costs during the past months resulted in arbitrage, and suppliers reduced the quotations in the domestic market. As per the sources, the Polyol price has fallen by almost 9.5% from August 2023 and hovered at USD 2300/MT on 22nd September 2023.

On the contrary, the escalation in cost support on Polyol feedstock Propylene Oxide was firm due to weak availability of supplies as the domestic feedstock Propylene Oxide plants were operating at low run rates amid sluggish demand from downstream industries. Simultaneously, the increase in upstream Propylene costs amid rising Crude Oil prices. The Crude Oil production cuts by OPEC+ and rising inflation and economic damage in the US is the reason behind this hike in upstream prices. According to sources, OPEC+ has agreed to reduce crude oil production cuts by 1.66 million barrels per day until the end of 2024.. Furthermore, Saudi Arabia and Russia will further cut down their production by 1 million barrels per day and exports to 300,000 barrels per day during Q4 2023.

As per the analysis, the Polyol market trend will likely improve marginally during the final quarter of the year 2023. The demand for Polyether Polyol will increase during mid-Q4 with the inclination in consumption rates of Polyurethane elastomers from the manufacturing sector to fabricate footwear and PU foam for mattresses production for furniture. Simultaneously, the rising upstream costs and high input prices during winter will raise the production costs, and Polyol prices will increase in the region.