Insulation foam applications drive MDI demand recovery, TDI recovery more subdued

16:53 PM | August 4, 2020 | Francinia Protti-Alvarez

MDI and TDI demand have been showing signs of recovery throughout June and July, albeit to different degrees of intensity. Demand for polyurethane insulation foams (rigid and spray) in the construction industry is driving up demand for MDI in Europe and North America, says James Elliott, associate director /polyurethanes at IHS Markit. In Asia, demand for polyurethane insulation foams in the appliance manufacturing and cold chain sector is the contributing factor to improved MDI consumption, Elliott says. However, the TDI demand recovery in flexible foams used in the furniture and bedding sectors is more protracted. The automotive end-use sector is hindering the MDI and TDI demand recovery, too Elliott adds.

According to IHS Markit Purchasing Managers Index ® (PMI), sentiment regarding new housing starts, workforce availability, and future projects have improved as construction sites are opened and work restarts. Social distancing is more easily practiced in this sector, allowing for a higher pace of demand recovery for those products linked to construction.

“When it comes to insulation, polyurethane foams (PU foam) have better properties versus expandable polystyrene (EPS) and rock wool. Selection of one over the other comes down to price,” says Elliott. “MDI prices, currently at an all-time low, and this is lending support to PU foam demand versus alternative products. While MDI prices have started to move up, short-term fundamentals will benefit PU foam demand over other options.”

Longer-term, the polyurethane industry is optimistic that the sustainability agenda and continued push for more efficient solutions tips the balance in favor of PU insulation foams, boosting Demand, Elliot remarks.

Meanwhile, estimates on the side of the appliance suggest. Demand has been moving back to at least 80% of pre-lockdown levels, according to IHS Markit data.

TDI demand has also begun recovering on all fronts since the second half of May, the same data shows, with recovery picking up during June. However, the comfort sector—key for TDI demand into flexible polyurethane foams—is finding the pace of recovery slow.

“The COVID-19 pandemic’s impact on unemployment rates means consumers are more cautious with their spending,” Elliott says. “Demand from the comfort sector was severely hit as lockdown measures caused bricks and mortar shops to close. Shops are reopening as lockdown measures ease, and there are signs of recovery in Europe, particularly where demand into this segment has exceeded expectations in the past month. However, TDI demand is still below pre-COVID[-19] levels.

"Meanwhile, TDI demand into the automotive sector remains very weak, due to high inventories along with the automotive supply chains and lower automotive operations," Elliott adds. “There is still poor demand for vehicles. So, the automotive sector is much more of a drag on demand vs. the comfort segment.”

Take a deep dive into the fundamentals of polyurethane end-user markets during IHS Markit’s Global Chlor-alkali, Vinyls, and Polyurethanes Online 2020, on 5–9 October.