Over the past two weeks, the Middle East PU market has moved beyond initial disruption into a phase of extreme tightness and fragmented pricing, driven not only by supply chain issues but also by shifting market behavior.
Severe Availability Constraints Across the Region
Market feedback indicates that material availability has deteriorated further since early March.
Main producers have limited supply due to force majeure and logistics constraints, leaving the market increasingly dependent on secondary channels.
As a result, traders and distributors are now the primary active sellers, offering whatever volumes they hold in inventory. Several market participants confirmed that "there is no material in the market", highlighting the depth of the supply shortage.
Trader-Led Market Creates Wide Price Gaps
Unlike the more structured pricing environment seen previously, the market is now highly fragmented.
Conventional polyols discussions range widely from $1,300 to $1,700/mt, depending on source and availability
Some traders are offering significantly higher levels, with indications of $2,000-3,000/mt in isolated cases
MDI and TDI offers also vary sharply, with some aggressive trader indications exceeding $2,500/mt for MDI and $3,000+/mt for TDI, though not all levels are widely accepted
This wide spread reflects a seller-driven market, where prices are increasingly determined by immediate availability rather than standard producer pricing.
Market Uncertainty Keeps Pricing "Unrealistic"
Despite the sharp increases, several distributors noted that current price levels are not fully reflective of stable fundamentals.
Rapid swings in crude oil prices, from around $80 to above $110/bbl and then back below $90, have created uncertainty in cost structures. As a result, many suppliers are hesitant to commit to firm pricing, with some choosing to delay quotations altogether.
In this environment, market participants describe pricing as "unstable" and "non-indicative", with expectations that some correction may occur once upstream volatility settles.
Producers Step Back, Allocations Tighten
With major suppliers facing logistical and feedstock constraints, producer participation in the spot market has reduced.
Limited or no availability reported from key regional producers in certain segments
Some suppliers prioritizing domestic markets over exports
Buyers increasingly unable to secure direct producer volumes
This has further strengthened the role of traders, reinforcing the current imbalance between supply and demand.
Logistics and Supply Chain Constraints Remain Critical
The logistics situation continues to underpin all market dynamics:
The Strait of Hormuz disruption has effectively restricted normal trade flows
Shipping delays, rerouting, and war risk surcharges continue to inflate costs
Lead times have extended significantly, reducing market liquidity
Even when material is available, delivery uncertainty remains a key challenge.
Outlook: Volatility to Persist, but Correction Risks Emerging
Compared to two weeks ago, the market has clearly shifted from tightness to dislocation.
In the short term:
Availability will remain limited
Prices will stay volatile and highly dependent on trader positions
Wide price gaps between low and high offers will persist
However, growing sentiment in the market suggests that current extreme price levels may not be sustainable, particularly if crude oil stabilizes and panic-driven buying slows.
As one distributor indicated, the market is currently driven more by reaction than fundamentals, suggesting potential correction once conditions normalize.