China's major polyurethane products staged a recovery in July. Compared with June, the average prices of TDI, polymeric MDI and flexible slabstock polyols increased more notably, up by around CNY 1,201/tonne, CNY 988/tonne and CNY 544/tonne, respectively. PO and rigid polyols posted only moderate gains, while the monthly average price of monomeric MDI remained below the June level. The rebound was mainly driven by cost support and supply-side tightening. Demand was not absent from the market, but it mainly appeared as phased restocking and mild improvement, so its continuity still needs to be tested.
Figure 1 July average price change of major PU products
Prices Rebounded First&Demand Still Needed to Confirm the Move
The July market was not simply weak across the board. Cost-side support and supply tightening first improved market sentiment, and downstream transactions then became the key test. Around mid-month, offers for some products moved up rapidly, and traders as well as downstream users showed a certain degree of restocking demand, leading to a temporary improvement in transactions. By late month, however, acceptance of high prices weakened, and some products saw stronger wait-and-see sentiment and price concessions. This suggests that demand recovery was still moderate and was not strong enough to support a sustained rapid rally.
PO and Polyether Polyols: Cost Pass-through Improved, but Acceptance Was Limited
The price center of propylene oxide (PO) moved up slightly in July, with its monthly average rising by around CNY 75/tonne from June. Although the monthly increase was limited, PO moved up rapidly around mid-month under the support of stronger propylene, plant fluctuations and tighter supply, pushing polyether polyol offers higher. Flexible slabstock polyols posted a much larger increase than PO, mainly reflecting a recovery from earlier low levels. Rigid polyols saw a more modest rise, indicating different levels of downstream acceptance across applications.
That said, cost pass-through for polyether polyols was still not smooth. Demand from sponge, construction materials, automotive, cold-chain foaming and other end-use sectors was not completely absent, but overall purchases were still dominated by just-in-time needs and phased restocking. After PO rose rapidly, downstream acceptance of high-priced polyether polyols weakened, making it more difficult for producers to continue passing on costs.
MDI and TDI: Supply Tightness Magnified Price Elasticity
The gains in MDI and TDI were largely driven by supply-side factors, which magnified price elasticity. In July, the average price of polymeric MDI increased by around CNY 988/tonne from June, while TDI rose by around CNY 1,201/tonne, making it one of the strongest performers among the major PU products. Plant maintenance, supplier volume control and low inventories jointly strengthened sellers' pricing stance, and prices rebounded faster than end-user demand recovered.
Monomeric MDI showed a more divergent performance. Its July monthly average price declined by around CNY 568/tonne from June. Although offers in some regions recovered toward month-end, the monthly average still stayed below the previous month's level, showing that different product structures and downstream applications are leading to wider divergence within the MDI market.
August Outlook: Domestic and External Variables to Shape the Price Center
Looking into August, the PU market should not be judged by demand alone. On the one hand, some plants that were previously under maintenance may resume operation, and supply tightness could ease marginally. On the other hand, crude oil and major feedstocks remain exposed to geopolitical tensions and overseas energy market disturbances, so cost volatility may continue to influence market sentiment. If feedstock costs stay firm, some products may retain downside support even without a strong demand recovery.
Freight rates, sailing schedule reliability and export order flow also deserve attention. In the first half of the year, exports helped divert part of the domestic supply pressure for products such as polyether polyols and MDI. However, if shipping costs rise, sailing schedules lengthen, or overseas customers slow their purchase pace, the export buffer for the domestic market may weaken. Therefore, the August market is more likely to trade amid repeated interaction among costs, supply, exports and actual transactions, with prices fluctuating at relatively high levels and product-by-product divergence remaining visible.
This is a brief PU Insight. For a fuller view of July price movements across the polyurethane chain, plant dynamics, import/export performance and the August outlook, please subscribe to the PUdaily Monthly Review Snapshot. PUdaily will continue tracking core products including PO, polyether polyols, TDI and MDI, helping readers follow market changes, cost movements and trading rhythm more efficiently.