Amidst changing global market environments, the polyurethane industry is undergoing significant transformation. Polyurethane capacities are diminishing in Europe and the U.S., while China is accelerating its expansion, forming a stark contrast. Dow recently announced that it is conducting a strategic review of European assets and intends to shut down a propylene oxide (PO) unit at Freeport, Texas in 2025. This move reflects chemical giants like Dow are making capacity adjustments amidst slow demand recovery and intensified competition, while China is evolving into a key player in the global polyurethane supply chain.
Dow Cuts Production in Europe and U.S., Focuses on Strategic Adjustments
Dow’s strategic adjustments are primarily in Europe, the Middle East, Africa and India (EMEAI), where the total sales for 2023 amounted to USD 14.5 billion, occupying a significant share of its global sales. However, the company reported a more than 15% decline in the region’s sales in 2024 compared to 2021, indicating soft demand. Jim Fitterling, CEO of Dow, emphasized the necessity of regional assets review and adjustments due to weak demand and uncertain regulatory environments. With the closure of PO plant in Freeport, Dow plans to rationalize polyol capacities to optimize asset footprint and increase profit margins.
Dow’s actions also mirror the margin pressures faced by the European and American polyurethane producers due to oversupply. Over the past four years, global PO supply has increased by 50%, and low operating rates have further led to margin compression. Hence, closing high-cost assets and focusing on high-yield businesses are becoming the strategic adjustment direction for European and American chemical giants.
Wanhua Chemical Leads in Chinese Polyurethane Market with Continuous Capacity Upgrades
In contrast to Dow, Chinese polyurethane giants are embarking on capacity expansion to consolidate their global competitiveness. Wanhua Chemical recently disclosed the EIA on a project to upgrade its original 800 ktpa MDI unit at the Fujian isocyanate complex to 1,500 ktpa MDI capacity. The company is also investing in upstream supply chains, initiating formaldehyde and methanol projects to achieve localization of key raw materials and ensure stable supplies. Wanhua Chemical’s continuous capacity upgrades will enhance its service capabilities to meet the growing market demands.
Wanhua Chemical’s capacity expansion indicates robust growth potentials in the Chinese polyurethane market. As construction, automobile and home appliance industries have witnessed significant growths in recent years, polyurethane demand has kept growing. Driven by policy support and robust demand, Chinese polyurethane suppliers will continue to increase investments to enhance supply chain resilience and achieve technological self-sufficiency.
Global Polyurethane Industry Transformation and Outlook
The current contraction of polyurethane supply in Europe and the U.S. contrasts with the growth in China. Overseas suppliers are gradually reducing capacities amidst soft demand, cost pressures and oversupply, while Chinese businesses are gaining increasing importance in the global market by elevating technological expertise and expanding production scales. With a maturing polyurethane market, China is expected to play a more critical role in the global supply chain.
This transformation manifests that the global polyurethane market is shifting its focus towards Asia, particularly China.
