For most of the past decade, the world's polyurethane markets behaved like a loosely connected system. When isocyanate or polyol prices moved in one region, the others tended to follow, cushioned by global trade flows, balanced capacity, and the assumption that material could always be sourced from somewhere. The first half of 2026 broke that assumption. From a shared January baseline, the seven major PU regions traced sharply divergent paths, and by May, the gap between the most expensive and cheapest markets had widened into something the industry has rarely seen.
This article examines how four overlapping forces, capacity growth, policy shifts, energy and supply shocks, and a K-shaped demand split, pulled global PU pricing apart in H1 2026, and why that divergence is likely to persist into the second half of the year.
A Tale of Seven Regions
The headline numbers say it plainly. Indexed to January, Europe finished H1 at the top of the price curve, followed closely by the Middle East, while North America stayed relatively flat. SE Asia, India, South America, and China occupied the middle ground, but each for very different reasons. What looks like a single "rising market" on the surface was, underneath, several distinct stories that happened to overlap in time.
China has emerged as the decisive force. The most important structural shift of H1 2026 is that China stopped being a passive price-taker and became a price-setter. Through the first five months, East China TDI averaged around CNY 20,650/t (up 33% year-on-year) and flexible PPG around CNY 14,250/t (up 32%), while polymeric MDI held remarkably steady at roughly CNY 20,900/t, down marginally year-on-year. The story isn't just the price levels, it's the role. China's TDI exports filled supply gaps left by Middle East and European outages, and Wanhua's integrated MDI capacity became a genuine source of global supply security. When Beijing cancelled the 13% polyether polyols export VAT rebate effective April 1, lifting export quotes by an estimated CNY 1,000–1,200/t, it didn't just move Chinese prices, it reset the floor for global polyol negotiations.
The Middle East faced a scarcity premium, not a price premium. The region's story was the most severe. From mid-March, the Strait of Hormuz crisis, concurrent shutdowns at Sadara and Karun, SABIC's suspension of quotations, and a Wanhua force majeure combined to take regional availability close to zero. TDI changed hands at peaks of USD 4,800/t, polymeric MDI around USD 3,500/t, and flexible PPG at USD 3,000/t. But these were not normal market highs, the challenge for buyers was no longer the price of material, but whether any material could be secured at all. Published list prices froze and stopped reflecting reality.
Asia's import-dependent markets absorbed the shock. SE Asia became the region's most volatile import market, with CIF prices surging into early April before partially reversing, flexible PPG swung the hardest. India told a parallel story, with peak CIF gains of roughly 73% for TDI, 65% for PMDI, and 86% for flexible PPG versus the Jan-Feb baseline. In both markets, the structural lesson was identical: the era of cheap, optional Chinese imports is over. Chinese material shifted from being a price option to a supply guarantee, and procurement strategy now has to price in a China export premium plus freight and policy volatility.
The Americas and Europe were driven by their own supply constraints. North America's elevated prices were a function of CO tightness underpinning MDI, plus TDI maintenance in Texas, a Korean TDI producer outage, and LyondellBasell's PO force majeure squeezing PPG. South America, by contrast, simply followed China's export direction. Europe saw the most structural tightening of all: around 560 kt/yr of PO capacity exited after the INEOS Cologne and LyondellBasell/Covestro Maasvlakte closures, and with US import relief narrowing and Middle Eastern supply gone, DEL NWE prices stepped up to 17-month highs by May.
The K-Shape Beneath the Surface
Strip away the regional noise and a single demand pattern emerges: a K-shape that is structural, not cyclical. Emerging-market demand cushioned the downturn, Indian automotive production rose 8.8% in the first four months, Brazilian auto sales jumped 19% in April, and Chinese cold-chain manufacturing expanded at double digits. At the same time, Eurozone construction stayed in sustained contraction. The same global PU market that was starving for material in one hemisphere was managing soft demand in another. That split is what makes H1 2026 so unusual: tight supply and uneven demand reinforced the regional divergence rather than smoothing it out.
What It Means for H2 2026
The base case through the second half is a continuation, not a reversal. A tight global balance is likely to persist as demand holds firm and new capacity stays limited, keeping prices oscillating in a mid-to-high band. Three swing factors will decide where within that band each region lands. First, the Middle East restart: if Sadara and Karun do not resume by Q3, the regional supply gap, and its scarcity premium, will remain. Second, Chinese policy: the polyol rebate cancellation continues to lift export quotes structurally, and any further trade-defense rulings across key markets will widen regional spreads further. Third, the pace at which European and North American upstream disruptions resolve.
The strategic takeaway for buyers is consistent across every region examined in this review. The game has changed from securing the lowest price to securing the lowest price plus supply stability. In a market that has stopped moving as one, early engagement, diversified sourcing, and an annual model that explicitly prices in geopolitical and freight volatility are no longer best practice, they are the cost of staying supplied.