Sluggish Market Fundamentals and Slow Trading offtakes Stabilizes the European Polyol Prices

In the prime week of 2024, the regional suppliers did not change their Polyol quotations amid the moderate availability of supplies in the market. Meanwhile, amid the ongoing economic slowdown in the region, the market did not showcase any significant improvement in inquiries, and Polyol consumption rates remained moderately low in the Polyurethane segment.

As per the sources, the Eurozone's manufacturing Purchasing Manager's Index improved and rose marginally in the concluding month of 2023, indicating a slight slowdown in the reduction of the manufacturing sector activities due to the decline in output rates and sluggish buying activities from the buyers. Consequently, the Polyol supply rates were firm, while offtakes remained moderately low from the domestic buyers due to sluggish consumption of Polyurethane foam from the manufacturing sector.

Meanwhile, from the beginning of the year, the cost support was stable on Polyol's prime feedstock Propylene Oxide amid the availability of oversupplies and weak offtakes from Polyol and Glycol manufacturers, along with a rise in supply chain concerns through the Suez Canal due to the conflicts in the Middle East region. Simultaneously, the stressed availability of feedstock Propylene supplies because of supply chain disruptions amid ongoing geopolitical tensions in Europe and the Middle East further impacted the production rates of Propylene Oxide and Polyol in the European region.

Additionally, the upstream Crude Oil availability was impacted in the international markets after the Houthi Rebels in Yemen attacked the vessels in the Red Sea in the Middle East, causing an increase in ship traffic and commercial vessels rerouted to the Cape of Good Hope.

However, in the second week of January 2024, the producers decreased the Polyol quotations by 0.6% as the demand from downstream Polyurethane manufacturers remained sluggish amid a decline in orders from the manufacturing sector due to an increase in the production costs of wood furniture in the region. Furthermore, the Polyol supply rates were consistent in the market.

According to the ChemAnalyst data sources, the Polyether MW 3000, μ 400-650 FOB Hamburg prices hovered at USD 1770/MT in Germany at the end of the second week of January 2024.

The Polyol prices are estimated to decrease further in the European market during the H1 of the first quarter of 2024. The consumption rates will likely remain sluggish from the Polyurethane segment amid moderate activities in the manufacturing sector. As per the sources, the global supply chain disruption and surge in freight costs amid the attacks in the Middle East region will not notably affect the Polyol supplies to the regional market.