Increase supply Causing Hexamethylene Diisocyanate Prices Decline in Europe

In September 2024, the Hexamethylene Diisocyanate quotations are declining in the European region. Buyers were approaching the market with caution, placing orders selectively, and maintaining a wait-and-see stance. In response to the off-season, major production regions have slowed market transactions, and manufacturers have slightly reduced their Hexamethylene Diisocyanate prices. The demand for Hexamethylene Diisocyanate was depressing in the polyurethane segment due to the sluggish consumption of materials in the construction sector. The eurozone construction sector continues to decline through the middle of Q3 2024. New orders dropped significantly, leading to reduced construction activity, ongoing cuts in employment, and decreased purchasing. The decline was widespread across the eurozone’s major economies, across all construction sectors. The HCOB Eurozone Construction PMI Total Activity Index held steady at July’s six-month low of 41.4, marking 28 consecutive months of reduced activity. Housing experienced the sharpest decline since April 2020, while commercial and civil engineering sectors also saw significant reductions. At the same time, the Europe PMI Output Index for Germany declined for the fourth consecutive month in September, indicating a contraction in overall output for goods and services. The manufacturing sector's decline intensified, with goods production experiencing its sharpest drop in a year.

Previously, in August 2024, the Hexamethylene Diisocyanate supply availability was moderate due to intermediate production rates amid labor deficits in the region during regional summer holidays and the low availability of feedstock supplies. In August, concerns about a potential recession in the US influenced the international crude oil market and refinery operations, resulting in a shortage of upstream Butadiene. This shortage has impacted the production of feedstock hexamethylenediamine domestically, leading to persistently low production rates of Hexamethylene Diisocyanate. Consequently, European exports decreased slightly in August 2024, showing a smaller decline than the previous month. It has reached its lowest point in several years. Europe's Export index has seen the steepest decrease compared to the last year, reflecting much more challenging conditions for exporters from Europe.  According to the ChemAnalyst data sources, the Hexamethylene Diisocyanate (HDI) FOB Hamburg quotations in Germany witnessed USD 4900/MT at the end of August 2024.

However, at the beginning of September 2024, the Hexamethylene Diisocyanate inventory levels inclined in the market as the production rates improved due to the increased availability of upstream, Butadiene supplies driven by improved refinery operations and Crude Oil availability amid a resumption of Crude Oil supply from Libya in September 2024. The demand for Hexamethylene Diisocyanate is stable as the business sentiments are unlikely to improve in the European market till the end of Q3 2024.

Anticipations are that the Hexamethylene Diisocyanate prices will increase in the European market with the beginning of the final quarter of 2024. The demand for Hexamethylene Diisocyanate would likely increase from the Polyurethane segment due to the anticipated increase in consumption of PU materials by regional furniture manufacturers. Simultaneously, operating costs will increase in the Hexamethylene Diisocyanate manufacturing units due to the escalation in energy costs.