Tensions in the Middle East and persistently high international crude oil prices are driving a rare, collective price revaluation across the chemical market. Unlike previous cycles driven primarily by demand, the current price surge in the polyurethane chain is characterized by the significant convergence and amplification of multiple driving factors. This is not a simple cost pass-through but a systemic restructuring of the entire industrial chain's value system following simultaneous tightening on the supply, cost, and policy fronts.
Price Data: Broad-based gains exceed expectations
According to PUdaily statistics, since January 2026, cumulative market price increases for Polymeric MDI and Monomeric MDI have approached 40%, with no significant signs of retreat yet. Over the past six months, mainstream products including TDI, flexible foam Polyether Polyols, and TPU have also seen gains exceeding 20%, indicating a broad-based upward trend across the polyurethane sector.
The scope of price increases extends even wider across the upstream and downstream chain. CASE Polyether Polyols have led with nearly 30% cumulative gains. Polyester polyols, spandex, cyclopentane blowing agents, and Polymer Polyols (POP) have all risen by over 26%. Flexible foam silicone oils, polyurethane catalysts, CPU, and polyurethane resins have also seen increases of around 22%. Virtually no segment of the polyurethane industrial ecosystem has been spared.
Figure 1: 2026 China TDI, Polymeric MDI, Flexible Foam Polyether Polyols Price Trend (CNY/tonne)
Beyond Oil: A multi-driver analysis of the current rally
A common market perception is that chemical price increases are merely a pass-through result of rising crude oil prices. However, the collective price hike in the polyurethane chain is driven by a far more complex logic than the simple 'oil price rise → cost transfer' chain.
1. Cost Side: Dual pressure from crude oil and natural gas
Crude oil prices have risen by approximately 40% over the past six months. This cost pressure is transmitted down the chain via pathways such as naphtha → propylene → Propylene Oxide → Polyether Polyols, and aniline → MDI/TDI. The comprehensive rise in feedstock costs provides the foundational support for higher market prices.
However, the more easily overlooked factor is the sharp spike in European natural gas costs. Over the past six months, European natural gas prices have tripled or quadrupled, forcing many energy-intensive chemical plants to reduce operating rates or shut down entirely due to sustained losses. European MDI, TDI, and Polyether Polyols capacity has long been operating at low levels, with leading producers imposing natural gas surcharges on customers. Given that polyurethane is a highly globalized industry, the upward shift in the European price benchmark directly pulls the global pricing system, including the Chinese market, upward for correction.
This point is particularly noteworthy—even if oil prices retreat in the future, the structurally high energy costs in Europe will continue to suppress local capacity utilization, creating a long-term supply gap that cannot be ignored.
2. Supply Side: Multiple pressures trigger global production cuts, supply gap exceeds expectations
If the cost side provides the 'foundational support' for this round of increases, then the unexpected contraction on the supply side is the direct trigger igniting the rapid price ascent.
From late 2025 to early 2026, influenced by persistently tight feedstock supply, geopolitical conflicts disrupting logistics and production schedules, and combined with scheduled cyclical maintenance plans, core polyurethane chain facilities globally—including those for MDI, TDI, Polyether Polyols, and PO—experienced a historically rare concentration of production cuts. Multiple units were forced to operate at reduced rates, with some shutting down directly. According to incomplete statistics, in Q1 2026 alone, over 1.9 million tonnes of global MDI capacity was simultaneously affected, creating a supply gap far exceeding previous market expectations. This synchronous supply-side contraction across companies and regions is an extremely rare historical phenomenon, and its impact on prices far exceeds that of normal maintenance at a single facility.
3. Demand Side: Demand recovery provides mild but sustained positive support
Compared to the sharp changes on the supply side, the pace of demand recovery is relatively mild, but its structural significance should not be underestimated.
China's extension of its home appliance replacement subsidy policy into 2026 directly provides consumption support for polyurethane rigid and flexible foam segments. The real estate market is gradually stabilizing under policy support, with the release of demand for improved housing driving steady growth in the use of building insulation materials, from which polyurethane insulation boards benefit significantly. End-consumption in automotive interiors, footwear, and apparel also maintains stable growth.
Meanwhile, a phased easing of US-China trade friction and marginal tariff reductions have spurred a rapid recovery in Chinese exports of home appliances and furniture, further expanding export demand for related polyurethane products. Although demand-side improvement has not yet entered an explosive growth phase, its sustainability and structural characteristics provide the necessary fundamental support for high-price operations.
4. Force majeure declarations and price hike notices from leading firms intensify market expectationsBehind the collective price hikes in the industrial chain, the actions of leading companies have played a key 'accelerator' role. Facing dual pressures of sharply rising feedstock costs and persistently tight supply, major global polyurethane producers have successively issued force majeure declarations while densely distributing price hike notices, with some companies implementing multiple rounds of increases in a short period. This series of actions has not only directly pushed up the price center for core products like MDI and TDI but has also created a ripple effect, pulling up prices for supporting products like Polyether Polyols, catalysts, additives, blowing agents, and silicone oils. This further solidifies market expectations for sustained high prices, creating a self-reinforcing cycle of 'tight supply → price hike expectations → advance stocking → even tighter supply'.
Transmission effect: From the industrial chain to end-consumption
The collective price increases across the polyurethane chain will ultimately be transmitted to ordinary consumers in various forms. Rising procurement costs for furniture and home appliances will lead to successive price adjustments for sponge mattresses, upholstered furniture, and household insulated appliances. Building insulation materials, automotive interiors, and footwear products will also bear indirect cost pressures, leading to a mild uptick in daily consumption expenditure. Overall, this round of transmission is gradual rather than shock-like, with limited short-term impact on end-consumption, but it will be fully reflected in product selling prices over the medium to long term.
Outlook: High-price volatility pattern hard to break quickly, price center to shift systemically higher
In summary, the pattern of high-price volatility in the polyurethane chain is unlikely to change rapidly in the short term. Multiple factors, including high-cost support from crude oil and natural gas, incomplete overseas plant maintenance, and the long-term low operating rates of European capacity, collectively mean the supply side is unlikely to achieve effective loosening soon.
In the medium to long term, if geopolitical tensions ease and international oil prices retreat, domestic polyurethane prices may see a mild correction. However, it is crucial to recognize the fundamental difference between this market situation and previous cyclical fluctuations—the structural characteristics of the global MDI and TDI supply-demand gap have not been fundamentally resolved. The continued exit of high-cost European capacity signifies a profound reshaping of the global capacity landscape. The future price center for polyurethane products is highly likely to stabilize at levels higher than those seen in the past two years.
This round of price increases is not the peak of a cycle, but the starting point of a new pricing system.
Given these unpredictable dynamics, access to accurate, real-time market intelligence has become essential. PUdaily’s Pricing Intelligence Service help industry participants anticipate shifts, benchmark prices, and make better-informed procurement and sales decisions amid the uncertainty.