HDI Prices Surge Nearly 10% in Europe Amidst Rising Demand and Supply Chain Challenges

Hamburg (Germany): In the European region, the Hexamethylene Diisocyanate (HDI) price movement shifted, and quotations increased by almost 10% during the prime month of 2024 due to an increase in demand from buyers and stressed availability of supplies amid afflictions in production and supply chain activities.

According to sources, the Eurozone's manufacturing Purchasing Manager's Index rose marginally at the beginning of 2024, indicating a slowdown in the reduction of manufacturing sector activities but remained below 50 amid a decline in new orders and output rates.

Sources also indicated that the demand for Polyurethane and Polyurethane components slightly picked up the pace in the automotive industries after Tesla and BYD reduced their prices, resulting in an escalation in orders for electric vehicles. The furniture industry also saw a surge in sales due to Presidents' Day deals. Consequently, orders for Polyurethane foam inclined from the automotive sector, and HDI consumption rates increased during the past month.

The upstream cost support escalated on HDI as Butadiene prices increased, especially in the second half of the month after an escalation in upstream Brent Crude Oil prices because of supply chain disruptions and ongoing geopolitical tensions. Meanwhile, a missile attacked a ship sailing through the Red Sea in the Middle East region, and the ships were rerouted to the Cape of Good Hope, which raised the ship traffic and afflicted the upstream Crude Oil supplies and production rates of HDI.

On the contrary, continuous decreases in feedstock Ammonia prices in the past few weeks, as supplies were excessively available amid sluggish offtakes from the buyers amid a reduction in demand from fertilizer manufacturers, resulted in an ease in the upstream cost support on the production costs of HDI.

At the end of January 2024, the HDI FOB Hamburg quotations in Germany witnessed USD 5150/MT, according to ChemAnalyst data sources.

As per estimations, the HDI price trend will persist, and prices will increase in the European region in the upcoming weeks of the first quarter of 2024. The reason is the increasing upstream prices amid supply chain disruptions and escalation in freight charges, impacting the production rates of HDI. Meanwhile, the demand for HDI will likely remain moderate as the orders will likely decrease from the Caprolactam producers because of the slowdown in consumption rates of Nylon 6 from the consumer end with an increase in temperature and a reduction in the consumption of thick fibre. Hence, HDI prices are likely to remain on the rise in the upcoming weeks.