The Middle East polyurethane market has shifted from a period of steady growth into crisis management mode following recent regional developments that have triggered severe logistical disruptions and sharp price movements across all major materials.
MDI and TDI Prices Accelerate on Supply Fears
MDI and TDI prices rose approximately $100/mt during February, with momentum building gradually through the month. However, the final week of February marked a significant acceleration as regional events disrupted supply chains. Industry sources now expect prices to increase another $100-150/mt in coming weeks as logistical challenges persist and inventories tighten further.
Traders across the region confirm the tightening trend. A Lebanon-based trader shared: "MDI discussions, some sellers reported low stock levels for March loading availability. For TDI, higher freight costs and limited availability for March loading prompted some sellers to independently adopt cost push efforts." Several other sellers report low stock levels for March loading availability, adding urgency to current discussions. "MDI allocations are becoming tighter than we expected," one regional distributor noted. "March volumes are limited, and buyers who haven't secured material early are facing extended wait times."
Polyols Follow Feedstock Costs Upward
PPG prices have also moved higher, closely tracking propylene feedstock costs. Local production remains relatively stable, but logistics surcharges are now being added to every delivery. The price rise for polyols reflects raw energy cost pass-through following the 8% jump in Brent crude oil prices on March 1, rather than supply scarcity. Further modest increases of $100-150/mt are expected as crude holds firm.
Feedstock Volatility Hits Production Economics
Since PU production relies heavily on petrochemical derivatives, the sharp jump in Brent crude has significantly raised input costs for regional systems houses. Propylene, the precursor to PPG, spiked following the oil move, directly impacting polyol economics. For isocyanates, benzene and toluene feedstocks face similar pressure, creating cost-push inflation across the entire value chain.
Production Disruptions Compound Supply Issues
Some regional production facilities have been impacted by recent events, reducing local supply availability and disrupting the flow of intermediate chemicals to neighboring markets. This has removed a significant source of regional supply, forcing buyers to look elsewhere at a time when global availability is already constrained.
Demand Shifts Create Mixed Picture
While the construction sector, which accounts for approximately 38% of regional PU demand, is seeing immediate slowdowns in high-risk zones, there has been a sudden spike in demand for PU-based insulation and protective coatings for emergency infrastructure. This demand shift is creating pockets of tightness even as broader construction activity softens.
Drastic Logistics Changes Reshape Supply Chains
The most immediate and severe impact has been on the movement of goods. The Strait of Hormuz has been closed since late February due to regional developments. This waterway handles approximately 20% of global oil and a vast amount of the region's chemical exports, making its closure a critical blow to regional trade.
Major carriers including Maersk, Hapag-Lloyd, and MSC have suspended all transits through the Strait of Hormuz and the Persian Gulf. Jebel Ali Port in Dubai, the region's primary logistics hub for PU chemicals, temporarily halted operations as a precautionary measure on March 1, creating backlogs and delays.
"Regional uncertainty remains elevated, and seller concerns about freight volatility and delivery disruptions will shape late-Q1 import sentiment amid selective buying trends," one Dubai-based freight forwarder explained. A regional trader confirmed: "Yes, shipping cost is increasing due to the situation in the region." Buyers are becoming more cautious but also more willing to pay premiums for confirmed available stock.
Shipping is now being diverted around the southern tip of Africa via the Cape of Good Hope, adding 10-14 days to transit times. Carriers have already introduced emergency surcharges of up to $2,000 per container, while freight forwarders have added war risk premiums and emergency bunker surcharges. Industry sources indicate these are adding roughly $150 per metric ton to transit costs for a standard MDI ISO tank.
Market Shifts to Crisis Mode
Contract pricing is being suspended by many distributors in favor of spot pricing, where quotes are valid for only 24 to 48 hours. Major suppliers in the region may begin allocating volumes, meaning buyers can only access a percentage of their historical average to prevent hoarding and ensure fair distribution of limited supplies.
"Right now, if you want confirmed material, you need to move fast," one regional trader said. "Sellers are reluctant to commit to volumes too far out because nobody knows what freight looks like next week."
Outlook: Further Increases and Structural Changes
With crude oil elevated and regional logistics disruptions continuing, MDI, TDI, and PPG prices are expected to rise another $100–150/mt in coming weeks. On the duration of disruptions, traders remain cautious. One market source noted: "Nobody can actually say how long this will last. It could be days, it could be weeks, it all depends on how the situation develops. Since the whole region is involved now, weeks seems more likely."
As one regional trader summarized: "Regional uncertainty remains elevated. Seller concerns about freight volatility and delivery disruptions will shape late-Q1 import sentiment amid selective buying trends."
Beyond immediate price moves, structural changes are emerging:
For now, buyers should prepare for continued firm pricing, extended lead times, and a new reality where supply chain reliability can no longer be taken for granted. As one trader summed it up: "The market before February and the market now are completely different. Everyone is adjusting day by day."
