Global Market Outlook on Polyester and Polyether Polyols
Polyester polyol production is only about 25 percent of the total polyol production. Polyester and polyether polyols contribute to majority of the polyol production across the globe
- Prices for polyester polyols have been increasing drastically over the years across the globe considering the feedstock DEG prices and its availability alongside increase in demand for polyols
- Global demand for polyester polyols is expected to remain above average at 3-4 percent CAGR through 2021 resulting in higher growth in market size over the years
- Asia Pacific was a dominating regional market for polyester polyol in 2017. It accounted for more than 30 percent share of the global polyester polyol market. US is self sufficient in terms of polyols due to the presence of multiple domestic producers and meets its excess requirements by importing from Korea and China
- Feedstock price increases would result in tightened margins forcing suppliers to quote higher prices in the coming years
Supply-Demand Dynamics – Polyester Polyols
- Increasing demand for polyester polyol in adhesives and sealants industry is likely to accelerate the growth of the market in near future. However, raw materials price volatility may limit the demand of polyester polyol over the years. Moreover, bio-based polyester polyols is likely to open new opportunities for polyester polyol market.
- Aliphatic polyester polyol dominated the global polyester polyol market in 2017 in terms of demand which accounted for over 60 percent share of the entire demand in 2017. Aliphatic polyester polyol is expected to have a significant impact owing to its rising demand in coatings, adhesives and sealants industries.
- Capacity additions are planned by 2-3 suppliers from Asia and Middle East in the coming years to meet the growing demand for polyester polyols
Polyols: Industry Drivers and Constraints
- Consumer sentiment has shifted from purchasing long lasting goods to short-life low cost goods. Periodic changes in daily use materials such as electronics, furniture and fittings, automotive accessories etc., has become the approach of younger demography, across the world.
- As a result consumption for polyols in foams and elastomers for packaging, furnish and cushions, coatings in electronics and automobiles is expected in crease, particularly in China and India, which are not only the most populated nations but with more than 60 percent of the population being in the age group of 16-35
Price Driver:Feedstock Prices (Ethylene and Propylene)
- Despite being at the end side of the value chain, polyols prices are often impacted by price changes in ethylene and propylene, since many contact negotiations include feedstock indices while fixing prices.
- Production of Natural Polyols (NOPs) from vegetable oils of soy, castor, palm, canola, sunflower etc. are being funded by in US, Germany and few South Asian countries. The market is expected to grow by ~50 percent by 2021 compared to 2015
- The major risk for regular polyols is the minimal difference in production costs. The more petrochemical feedstock prices increase, the faster the NOPs market grows
Global Market Size and Outlook – Polyether Polyols
- Volatile feedstock propylene prices has resulted in much greater increase in polyether polyol prices over the last 2-3 years. In the coming years, it greatly depends on how the crude oil behaves thereby deciding who would be facing the brunt of the price hikes
- The Middle East is now set not only to satisfy its own regional demand (substituting European imports), but also to become a significant global net exporter as a result of its cost competitive position, mostly targeting Asia and Turkey.
- The polyether polyols oversupply situation is expected to come back into balance in the mid-to-long term future, as demand increases rapidly in the Asian markets, and the rate of capacity expansion is expected to slow in the next five years. In the meantime, polyurethane foam producers, particularly for bedding and furniture applications, are expected to continue enjoying relatively depressed polyols prices and higher margins, at least in the short-term future.
Supply-Demand Dynamics – Polyether Polyols
Availability for polyols is comfortable and is expected to remain so in 2018. Polyol supply experienced only a single major disruption in 2017 stemming from the impact of Hurricane Harvey and even then most of the disruption was due to feedstock shortages and logistical bottlenecks
Most major polyether polyol producers are in the process of developing or have already developed natural oil–based polyols (NOPs). These products are based on renewable (vegetable) oils including soybean, castor, rapeseed, and corn oils. Although these products have a “green” image, there is also concern about the competition for arable land between nonfood and food production in emerging markets.
Global polyether polyol production capacity has expanded significantly over the past 5 years, by 2.8 million metric tons, while demand growth, primarily led by the bedding, automotive and construction industries, has only achieved less than half of this amount, increasing by only 1.1 million metric tons from 2010-2015. Most capacity growth has taken place in China, far in excess of domestic demand, which has led to a global oversupply situation. This has depressed polyols prices significantly.