Polyol prices decline in the US amid a reduction in demand from buyers

The Polyol prices witness a 0.4% decline in the USA in the first half of April 2024 amid firm availability of supplies. At the same time, the orders for Polyol stabilized from the buyers amid moderate offtakes for Polyurethane components in the manufacturing and construction sectors. Nevertheless, slow market offtakes and limited demand fundamentals remain the key reason for weak price trend for Polyol. According to sources, the USA's Manufacturing Purchasing Manager's Index climbed above 50 during this period, indicating an expansion in manufacturing sector activities and a surge in new orders in the country during the past month. At the same time, the Producer Price Index, which measures factory-gate costs for goods, rose by 0.2% in March 2024 from the preceding month, and the Consumer Price Index increased by 0.4% on a MOM basis.

The household furniture demand for Polyurethane components and Polyol in the manufacturing sector was estimated to incline during Easter. There were some notable shifts within the construction industry demand from the beginning of the year. On the residential front, single-family homebuilding is projected to experience a modest to moderate increase, which will more than compensate for a substantial decrease in multifamily construction. Moreover, BMW has set a steady target for 2024 margins as it invests in electric vehicles. In contrast, US automakers are increasing their hybrid production as electric vehicle sales falter, indicating a shift towards eco-friendly conveyance in the automotive industry.

At the same time, the availability of Polyol stocks was firm in the market, and production rates remained unaffected amid the consistent availability of feedstock Propylene Oxide supplies and stable costs. Simultaneously, Propylene costs, which is the crucial feedstock for Polyol decreased amid an increase in stockpiles of upstream Propane in the country. The consumption rates of Propylene declined for heating purposes with an increase in temperatures in the Northern Hemisphere. On the contrary, as per EQT, the energy sector also witnessed escalations in prices due to geopolitical tensions and positive economic data. Moreover, global freight costs decreased in March 2024 as container traffic bypassed the Suez Canal, stabilizing operations, and lowering ocean rates on major trade routes. The global air cargo market witnessed a rise in demand for the third consecutive month in March, fuelled by the expansion of e-commerce and disruptions in maritime shipping routes in the Red Sea, which consequently affected air freight rates. Towards the end of the last month, ocean rates continued to decline, affecting Polyol supplies in the market. Additionally, the interest rates by the Federal Reserve Bank remained steady, along with an extension of 2024 rate cuts.

According to ChemAnalyst, the Polyether Polyol MW 3000, μ 400-650 FOB Texas quotations in the USA witnessed USD 2230/MT at the end of the second week of April 2024.

As per the estimation, the Polyol demand may increase from buyers during Q2 of 2024 amid easing inflation rates in the region. The Polyol offtakes are anticipated to remain firm from the Polyurethane segment due to the expected rise in demand for products in the construction sector. At the same time, production costs of Polyol may remain firm amid anticipation that the surge in gas prices by EQT will raise energy prices.