The European polyol market has been facing unprecedented challenges and uncertainties in the second half of 2024. Europe, as a global major economic player, attracts significant attention due to its market dynamics. However, amid energy crisis, high inflation and geopolitical conflicts, the European polyol market is currently undergoing a difficult period.

1. Double Blow of Energy Crisis and High Inflation

Europe’s energy crisis has been escalating since 2023, resulting in price surges that forced many plants to be shut down due to the inability to afford high energy costs. This issue has not been fundamentally solved in the second half of 2024. Instead, it has worsened. Rising inflation weighs on consumers’ purchasing power, creating more market uncertainties. It often forces households to allocate limited funds towards essential items like food and pull back on non-essential spend such as buying a new mattress or sofa, which are downstream products of polyols.

2. Severe Impact Caused by Downstream Markets

Polyether polyols, as essential chemical raw materials, have a wide range of applications in various sectors such as upholstered furniture, automotive interiors, and construction materials. However, these downstream markets have all been severely impacted in the current macro-environment. The upholstered furniture industry is particularly affected, with many furniture manufacturers having to reduce outputs or even facing the risk of bankruptcy due to declining demand. The automobile sector is also experiencing a downturn. Auto production has slumped as a result of supply chain disruptions and weak demand, further reducing demand for polyether polyols.

3. European vs Chinese Markets

The European polyether polyol market faces even more severe challenges than China. While China’s domestic market is relatively saturated, it can absorb excess capacity through export expansion. Chinese polyether polyol suppliers hold a certain market share internationally due to their price advantage. With high production costs, European polyether polyols are not competitive in export markets. Therefore, European suppliers are unable to expand business through price competition like their Chinese counterparts.

4. Price Trends & Cost Support

European polyether polyol prices have remained low in the second half of 2024. The overall market is subdued due to weak demand, particularly in the automobile and upholstered furniture sectors, which have shown significantly reducing demand for polyether polyols. Propylene oxide, as one of the essential raw materials for polyether polyols, plays a crucial role in influencing the market prices of polyether polyols. However, the cost support of propylene oxide in Europe is not very strong. Many European polyether polyol suppliers have had to reduce production levels to cope with cost pressures.

5. New Capacity & Market Outlook

Despite the grim current market situation, there are still some positive factors in the European polyether polyol market. For instance, Hungary’s MOL Group plans to commence polyether polyol production in the second quarter of 2025. Currently, the company is gradually conducting trial production and intends to procure propylene oxide externally as a raw material. The addition of new capacity is expected to bring some growth momentum to the market. Nevertheless, the European polyether polyol market in 2024 continues to show a downward trend.