Stagflation hits US polyurethane foam market

29 July 2009 22:20  [Source: ICIS news]

HOUSTON (ICIS news)--The US polyurethane (PU) foam market was mired in uncertainty as the sector has been plagued by stagnant downstream demand and increasing feedstock prices, PU foam industry players said on Wednesday.

“The urethane producers are definitely between a rock and a hard place with the chemical companies pushing hard on one end and the foam users pushing back just as hard on the other,” a PU producer said.

In an effort to ease squeezed margins, isocyanates and polyols producers nominated price increases of around 8 cents/lb ($176/tonne, €125/tonne) for July and August, but the hikes face resistance from buyers who say demand is too weak to push through any increase.

“Customers are pushing for moderation if not a total rollback of the increase,” a market player said. “I have not heard of any supplier agreeing to any price other than 8 cents/lb up in all three products.”

Isocyanates and polyols are feedstock chemicals used in the production of PU foam. Toluene di-isocyanate (TDI) and methyl di-p-phenylene isocyanate (MDI) are two types of isocyanates.

The rapid rise of upstream markets since January has tested the ability of PU intermediates producers to pass through cost increases.

Spot prices for benzene, an MDI feedstock, have almost tripled and have been talked around $3.70/gal for August.

Propylene, used in the production of polyols, has also followed the trend. US propylene producers recently nominated increases of 3 cents/lb and 5 cents/lb for August, extending an uptrend that began in January and has more than doubled prices.

Toluene, a TDI feedstock, increased about 55% since the beginning of the year and was expected to move higher on snug supply.

“With propylene up maybe another 5 cents/lb this month, producers need the increase very badly, but business is slow and supply is long,” a polyol buyer said.

On concern for continued sluggish demand and an extended economic recession, many producers have chosen to reduce operating rates or permanently shut down production.

Bayer MaterialScience said it will permanently shut down a small MDI production line in the US, but would not provide further details. 

Bayer has a 300,000 tonne/year MDI production plant in Baytown, Texas, according to ICIS plants and projects.

Bayer said further restructuring measures would take place depending on economic developments, with more decisions due at the end of the year.

Major US isocyanate and polyol producers include Dow Chemical, BASF, Bayer and Huntsman.

($1 = €0.71)

For more on Bayer's Baytown plant, visit ICIS plants and projects
For more on MDI or TDI, visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Leela Landress
+1 713 525 2653

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 29 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly