Weather challenges and Supply Crunch Elevates the US Polyol Prices

In recent weeks, there has been a gradual rise in Polyol prices in the USA. This trend persisted this week, with Polyol prices continuing to show bullish movement and producers increasing prices by 2% since the start of February 2024. This increase comes amid moderate demand and strained supply availability.

The production of feedstock Propylene Oxide were affected by the tight availability of upstream Propylene supplies and rising upstream Propane prices in the region. At the same time, LyondellBasell in Bayport Texas, with a feedstock Propylene Oxide production capacity of 60,000 MTPA, went under force majeure on 3rd Feb 2024. Furthermore, the occurrence of North American winter storm Uri on 13th February 2024 impacted the operating rates at regional Polyol units. Consequently, production and availability of Polyol supplies remained inadequate in the market, and producers raised their quotations. Meanwhile, Polyol offtakes remained moderate by buyers from the regional market.

As per the sources, at the beginning of 2024, the USA's manufacturing Purchasing Manager's Index showcased some improvement and rose above 50 due to an escalation in new orders and ease in decline in output rates, indicating an improvement in the manufacturing sector activities. The construction sector saw a rise in demand for Polyol due to the unexpected rise in construction spending in December. Simultaneously, the demand surged from the furniture industry due to an increase in sales due to Presidents' Day deals and increased demand for painted furniture and energy-efficient products in the refrigeration industries. Consequently, the orders for Polyol were firm from the Polyurethane segment amid a surge in demand for Polyurethane materials from the construction and manufacturing sectors.

Additionally, the availability of previous stocks was low in the market from the past few weeks as the production rates were affected by the weak availability of feedstock supplies amid the escalations in upstream prices amid consistent consumption of Propane for heating purposes and declining stocks in the region. It also raised the cost support on the previous costs of Polyol.

According to the ChemAnalyst data sources, the Polyether Polyol MW 3000, μ 400-650 FOB Texas quotations in the USA witnessed USD 2190/MT during mid-February 2024.

As per the estimation, Polyol prices will increase further in the USA due to consistently improving demand from the Polyurethane segment. The construction sector will pick up the pace in Q2 of 2024, so the demand for Polyurethane materials will escalate in the construction sector. Meanwhile, the production rates will remain afflicted due to the low availability of feedstock inventories in the region and will stress the availability of Polyol supplies in the regional market.