Chemical Profits Recover, But Why Does Polyurethane Demand Remain Uneven?-2

Consumption also failed to show a broad-based recovery. In January-May 2026, total retail sales of consumer goods increased by 1.4% year on year, but the May figure declined by 0.6% year on year. Several categories closely related to polyurethane were weaker: in May, retail sales of household appliances and audio-video equipment fell by 15.6% year on year; furniture declined by 8.7%; automobiles fell by 16.1%; and building and decoration materials dropped by 13.6%.

These data have direct implications for the polyurethane chain. Weak home-appliance retail sales suggest limited recovery in demand for refrigerators, freezers, water heaters and other white goods, reducing support for PMDI rigid foam. Declining furniture retail sales reflect cautious consumption in upholstered furniture and home furnishings, weighing on TDI, flexible foam polyols and related additives. Lower automobile retail sales also pressure demand for seat foam, interior materials, CASE systems and TPU.

Chart 3. Major PU-related downstream retail indicators were weak in May.

Table 3. Major PU-related downstream consumption indicators were weak in May

The automobile sector also reflects a divergence between production and consumption. Industrial production data show that automobile output in May was 2.582 million units, down 3.2% year on year; among them, new energy vehicle output reached 1.489 million units, up 17.8%. In January-May, automobile output totaled 12.276 million units, down 4.7%; new energy vehicle output totaled 5.776 million units, up only 0.9%. In other words, new energy vehicles remained a structural bright spot, but their growth was not enough to fully offset the pressure from overall automobile consumption and traditional vehicle weakness.

Table 4. Automobile sector shows structural divergence

Chart 4. PU demand transmission logic: profit recovery does not equal full demand recovery.

recovery.

Table 5. Transmission logic for major PU end markets

Therefore, the current Chinese polyurethane market is not facing a broad-based demand recovery, but rather a coexistence of profit repair and weak end-market recovery. The improvement in chemical industry profits mainly reflects changes in upstream raw material prices, product spreads, cost structures and supply-demand conditions in some sectors. However, from the perspective of polyurethane end markets, the real estate chain remains weak, home appliances and furniture consumption are under pressure, and automobile demand is still clearly divided internally.

This also explains why recent polyurethane feedstock markets, despite support from costs, plant maintenance and producer supply control, have still shown limited sustainability in price increases. Upstream producers may see a period of profit repair, but without stronger orders and terminal consumption downstream, it is difficult for the market to achieve smooth transmission from raw materials to finished products.

Sources

National Bureau of Statistics of China: Profits of Industrial Enterprises Above Designated Size Increased by 18.8% in January-May 2026, June 27, 2026.