Houston (ICIS)-The estimated price of polyether polyols in the United States increased by 3 cents/lb (US$66/ton), following the rise in the cost of propylene raw materials.
The main driving factor for the recent rise in polyol prices is the rising cost of propylene raw materials. The May propylene contract closed up 4.5 cents/lb, ending the nine-month period when the propylene contract was settled in the form of rollover or reduction.
As inventory pressure eased in May and spot prices rose, propylene contract prices were under pressure to rise.
Due to weak demand for derivatives and sufficient supply levels to suppress sentiment in the spot market, spot propylene prices opened in June and showed a downward trend.
The US polyether polyol market has a relatively long structure, and the price tends to follow the trend of the upstream propylene market, lagging one or two months behind.
The market has been discussing plans to increase 7-8 cents per pound, reflecting the expected increase in raw material costs and the compression of profit margins for polyol producers.
With the increase in propylene contracts, in many cases at least part of the increase has been implemented, ending the long-term flat to falling situation in the polyol market.
The price of polyether polyols assessed by ICIS dropped by 14 cents/lb from late November to early April, reflecting the significant drop in upstream costs in the fourth quarter of 2018 and the first quarter of 2019.
In recent months, producers have been facing the problem of profit compression because they cannot fully reflect the sharp increase in propylene costs in the first half of 2018.
Due to the slowdown in demand in the automotive, furniture and bedding industries and the poor performance of the construction industry during the peak season, the demand for downstream polyurethane systems has not grown as fast as last year.
Polyol and isocyanate react to produce polyurethane foam.
Polyether polyols are used in cushioning applications such as furniture, bedding and car seats, as well as commercial refrigeration and packaging.
Major producers of polyether polyols in the United States include BASF, Dow, Covestro and Monument Chemical.
The image above shows a polyurethane made from polyether polyol. Photo by Al Greenwood
Zachary Moore's Focus Article
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