Chemical Profits Recover, But Why Does Polyurethane Demand Remain Uneven?-1

Core view: Chemical industry profits improved significantly, but key polyurethane downstream sectors such as real estate, home appliances, furniture and automobiles have not yet formed a broad-based recovery. A more accurate reading is that profits are repairing along the industrial chain, while demand recovery remains mainly structural.

The latest data from China's National Bureau of Statistics (NBS) sends an important signal: profits in the chemical industry are recovering clearly, but polyurethane end-market demand has not recovered in the same way.

On the profit side, total profits of industrial enterprises above designated size increased by 18.8% year on year in January-May 2026. Among them, profits in chemical raw materials and chemical products manufacturing rose by 71.6%, far above the overall industrial level. This indicates that the chemical chain has indeed seen an improvement in profitability, but this improvement should not be directly equated with a full recovery in terminal demand.

Chart 1. Profit recovery in the chemical industry was significant.

Table 1. Chemical industry profit recovery

However, profit recovery does not necessarily mean that terminal demand has fully recovered. For the polyurethane value chain, the more important indicators are the real performance of major downstream sectors such as real estate, home appliances, furniture and automobiles. The May data show clear divergence, with some indicators still in negative territory.

Real estate remains the biggest drag. In January-May 2026, national real estate development investment reached RMB 3,035.6 billion, down 16.2% year on year; residential investment reached RMB 2,342.6 billion, down 15.6%. During the same period, floor space under construction, newly started floor space and completed floor space declined by 12.3%, 22.6% and 23.4%, respectively. This means that new construction demand remained weak, weighing on PMDI-related applications such as building insulation, pipe insulation and spray rigid foam. At the same time, weak property sales and delivery cycles continued to affect furniture, mattresses and upholstered-home demand, thereby dragging on flexible foam polyols and TDI consumption.

Chart 2. The real estate chain remained in negative territory.

Table 2. Real estate chain remains under pressure