According to China Chemical Industry News, international oil prices have experienced significant volatility since July. Brent crude prices surged rapidly from around $70 per barrel to over $100, only to fall back to approximately $85 within a few days. However, this intense fluctuation in the crude oil market did not immediately translate to the global chemical market; while the broader sector struggled to follow the upward trend, the polyurethane raw material market charted an independent course. Its two core products—diphenylmethane diisocyanate (MDI) and toluene diisocyanate (TDI)—entered a period of strong performance rarely seen in recent years.
During the final trading week of July, industry giants Wanhua Chemical, BASF, and Huntsman implemented price hikes for MDI and TDI—varying in magnitude—within nearly the same timeframe. Effective July 29, Wanhua Chemical raised MDI and TDI prices in Southeast Asia by $200 per tonne; on August 3, it announced a further $200-per-tonne increase for MDI in the Middle East, Africa, and Turkey. Huntsman adopted a strategy of staggered price increases across different regions and timeframes: on July 27, it raised prices in the Indian subcontinent by $300 per tonne, and effective August 1, it increased prices for all MDI products in Europe, Africa, and the Middle East by €250 per tonne.
Three key factors underpin this round of price increases. First, geopolitical conflicts in the Middle East continue to disrupt international logistics for crude oil and chemical products, driving up costs for raw material procurement and long-haul shipping. Second, multiple MDI/TDI facilities worldwide underwent simultaneous maintenance to tighten supply: Wanhua’s BorsodChem plant in Hungary (400,000 tonnes MDI and 250,000 tonnes TDI capacity) began a roughly 35-day maintenance shutdown on July 17; Tosoh’s Ruian plant (80,000 tonnes MDI capacity) underwent a month-long shutdown for maintenance at the end of July; BASF planned a 45-day maintenance period; and Wanhua’s Yantai plant (1.1 million tonnes MDI capacity) also had routine maintenance scheduled for August. Thirdly, the MDI and TDI markets are highly concentrated; the top five giants control over 90% of global production capacity, making it easy for coordinated price adjustments by these leaders to trigger synchronized price movements.
In contrast to the booming international crude oil market, the global chemical market has significantly lagged behind. This phenomenon reflects a weakening of cost-push dynamics. Following the escalation of conflict in the Middle East, production facilities for products such as methanol and ethylene glycol in the region were completely shut down; global traders shifted to sourcing alternatives from other regions, where landed costs were approximately 20% higher than those of traditional Middle Eastern supplies. However, downstream end-user demand has seen limited recovery, making it difficult to pass these high costs on to the end market. Downstream enterprises have generally adopted low-inventory strategies, scheduling production based on orders and curtailing procurement volumes. While high costs are transmitted down the supply chain, limited downstream absorption capacity has led to a marked divergence in profitability across the chain.
In the short term, driven by the dual factors of cost support and tightening supply, MDI and TDI prices are more likely to rise than fall. Global MDI capacity growth is projected to remain below 2% in 2026, and no new TDI capacity is expected between 2026 and 2027; consequently, MDI and TDI markets will likely maintain a tight balance or even face supply-demand gaps. As the market enters the traditional peak demand season, operating rates in downstream sectors—such as refrigerator cold chains and construction insulation—are rebounding, leading to a recovery in restocking interest. However, if downstream sectors remain unable to absorb the rising cost of raw materials, upward momentum may gradually wane.
Regarding the chemical market as a whole, international oil prices continue to fluctuate between the $80 mark and the $100 threshold. Uncertainties surrounding Middle Eastern energy corridors, the rapid restructuring of global trade flows, and the vulnerability of Europe's energy supply structure all suggest that market volatility will persist.
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