Global Polyurethane Markets Hit by Supply and Cost Shocks in Q2 2026

The global polyurethane industry is navigating one of its most challenging quarters in recent memory, with rising raw material costs, supply chain disruptions, and ongoing Middle East instability converging to reshape market dynamics across all major regions.

The global polyurethane (PU) market entered Q2 2026 under considerable strain as the compounding effects of rising feedstock prices, geopolitical instability, and logistics disruptions began to take a visible toll on producers and downstream consumers alike. After a relatively stable start to the year in January and February, market sentiment deteriorated sharply from March onward following the escalation of conflict in the Middle East.

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Crude Oil and Feedstock Costs Drive Price Hikes

The surge in crude oil prices triggered by the intensifying Middle East conflict has had a direct and severe impact on the cost of key polyurethane raw materials, MDI (Methylene Diphenyl Diisocyanate), TDI (Toluene Diisocyanate), and polyols. In response, major global producers including Covestro, Wanhua Chemical, Huntsman Corporation, and BASF have implemented aggressive price increases across multiple polyurethane grades to offset upstream cost pressures and tightening supply availability.

Middle East: Supply Critically Constrained

The Middle East region has emerged as one of the most acutely affected markets. Supply availability for MDI, TDI, and polyols remains critically limited following operational disruptions at key regional production facilities, with no confirmed restart timelines communicated to the market.

A brief period of optimism emerged on April 17 when the Strait of Hormuz was temporarily declared open, raising hopes for improved material flows. However, renewed vessel incidents and escalating regional tensions reversed the situation within 24 hours, dashing expectations of a near-term recovery. Polyurethane market participants in the region are now grappling with severe procurement risks and the challenge of maintaining stable downstream production.

China: Value Chain Disrupted Across Key End-Use Sectors

In China, the sharp rise in MDI and TDI prices has caused widespread disruption across the polyurethane value chain, particularly in the construction, furniture, appliance, and automotive sectors. MDI, which is heavily consumed in rigid and semi-rigid polyurethane foam applications such as insulation panels, refrigerators, and freezers, faced amplified cost pressure driven by elevated feedstock and energy prices.

TDI prices also surged sharply, with severe repercussions for the flexible foam segment - impacting producers of mattresses, sofa cushions, and automotive seating. Many enterprises were forced to reduce operating rates or temporarily curtail production. A mild correction in MDI and TDI prices was observed in early May 2026, though market confidence remains fragile amid persistent uncertainty over energy costs, export demand, and supply stability.

Europe: Squeezed Between Cost Inflation and Weak Demand

The European polyurethane sector has similarly come under substantial pressure. TDI feedstock toluene prices have continued to rise in step with strengthening Eurobob gasoline and crude oil markets, both of which have remained highly volatile since the escalation of geopolitical tensions. Elevated energy prices have further amplified production costs for isocyanates, while downstream demand across furniture, bedding, insulation, coatings, and automotive interiors remains subdued.

Buyers across key consuming sectors have adopted cautious purchasing strategies, and intensive maintenance shutdowns at several major TDI facilities have tightened regional supply further. The long-term competitiveness of multiple European chemical plants is also under threat from persistently high energy costs.

Outlook: Stabilisation Hinges on Geopolitical Resolution

If the geopolitical situation stabilises and crude oil prices recede, the cost burden on the global polyurethane market is expected to ease gradually. Leading producers such as Covestro, Wanhua Chemical, Huntsman Corporation, and BASF may respond by moderating prices for TDI, MDI, and polyols.

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A reduction in feedstock costs would provide meaningful relief to downstream industries spanning flexible and rigid foam, furniture, coatings, adhesives, and automotive applications, potentially restoring margin stability and rebuilding confidence across the PU value chain. However, for the remainder of Q2 2026, the market outlook remains heavily contingent on developments in the Middle East and the trajectory of global energy markets.

About Price WatchTM

At Price WatchTM, we provide real-time polyurethane pricing intelligence, feedstock monitoring, freight tracking, plant operating assessments, and regional trade flow analysis across key global markets. From Chinese MDI and TDI operating trends to benzene and propylene feedstock movements, our intelligence platform enables procurement teams, traders, converters, and manufacturers to respond faster, manage supply risks more efficiently, and identify market turning points before they begin impacting margins.

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Price-Watch AI is an India-based, independent raw material price reporting agency that provides real-time price forecasts and data-driven insights into global raw material markets. Price-Watch AI specializes in tracking raw material prices, analyzing market trends, and delivering timely updates on plant shutdowns, supply disruptions, capacity expansions, and demand-supply dynamics. The Price-Watch AI platform empowers manufacturers, traders, and procurement professionals to make faster, smarter decisions. Leveraging AI-powered forecasting and over a decade of historical data, Price-Watch AI transforms market volatility into actionable opportunity.

This release was published on openPR.