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Two Minutes to Tell You Why Polyols Price Go up So Much

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PUdaily, Shanghai-The polyols price increases RMB 500/ton in a single day, which is the highest level price rise this year.

So many people are wondering what’s wrong with polyols?

The answer is tight goods supply.

Why is goods supply tight?

Because the raw materials supply is tight.

Why is raw materials supply tight?

That’s because both ethylene oxide and propylene oxide supplies are tight. And EO supply is tighter than PO supply.

EO:

Some EO manufactories were already during the overhaul period.

As for the rest EO/EG co-production facilities which didn’t overhaul, the products tend to be ethylene glycol, flowing to industries such as PET and refrigerating fluid.

Why not produce EO?

That’s because the customer consumption and profits of EO are smaller than that of EG.

The customer consumption of EO is so small that one of the polyols plant’ EO procurement is less than 10kt a year.

PO:

Under the environmental inspection pressure, many PO manufacturers need to adjust and overhaul facilities. So PO capacity utilization rate is lower, combined with low PO inventory which only could meet needs of one or two days, PO price rise becomes an inevitable trend.

Under pressure by unscheduled PO price rise, polyols manufacturers wouldn’t choose to produce more, so there is low inventory.

The peak season of “Golden September and Silver October” is coming. As the downstream buyers’ inventory is low, they need to prepare raw materials ahead of time when all this falls on price rise period. As manufacturers would purchase when price is rising and won’t purchase when price is down. Then polyols sources become tighter, and some manufacturers suspend offering directly because of no goods.

So, now do you understand why polyols price go up so much?