OUTLOOK ’19: US polyol demand expected to remain strong

Zachary Moore

04-Jan-2019

HOUSTON (ICIS)–US polyol demand is expected to stay strong heading into 2019 as the outlook for downstream polyurethane systems is healthy.

Polyurethane demand continues to find support from moves to improve energy efficiency as polyurethane foams offer excellent insulating properties.

Innovations in the industry are also driving demand for polyurethanes. Engineers are currently developing new applications for polyurethanes including trailer liners, athletic shoes and tyres.

Polyols are combined with isocyanates to create polyurethane foams.

Polyurethane systems are used in a wide variety of applications, with some of the primary consumption sectors being construction, automotive, home appliance and furniture and bedding industries.

Automotive consumption slowed in 2018 and may continue to fall in 2019. The decline in automotive sales in 2018 was in line with industry expectations.

Furniture and bedding demand have also seen some weakness in North America owing to the bankruptcy of major mattress retailer Mattress Firm as well as increasing competition from Asian mattress producers. US mattress manufacturers have filed a petition with the government to apply anti-dumping duties to mattresses from China. The Department of Commerce is expected to issue a ruling on the petition by the end of February.

Consumption from the construction sector has been strong and is expected to remain healthy in 2019. A projection from the American Institute of Architects (AIA) predicted 4.7% growth in nonresidential consumption in 2019, up from a projection of 3.9% growth predicted earlier in 2018.

Home appliance demand tends to track trends in the construction industry and is also anticipated to post healthy growth in 2019.

The US polyol market is structurally long and supply is expected to remain loose throughout 2019.

US polyether polyol pricing generally follows the direction of propylene feedstocks with a lag of one to two months. Propylene feedstock costs were subject to significant price volatility during 2018, although this volatility is expected to lessen in 2019.

Propylene supply is anticipated to improve in the coming year as lower oil prices will encourage flexible crackers to use heavier feeds while the addition of new crackers will generate higher propylene production regardless of feedslate.

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Focus article by Zachary Moore

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