The global polyurethane industry is undergoing a seismic shift in 2024. Facing challenges ranging from macroeconomic fluctuations, soaring energy costs and increasing environmental pressures to restructuring market landscape, major players are adopting various strategies to tackle challenges and seek long-term development. This article will provide an in depth analysis on this industry transformation from three aspects: plant closures, M&As and capacity expansions.

1. Force Majeure Events & Plant Closures: Signals of Self-Adjustment

Dow Closes Two Plants

· Closure of the U.S. PO Plant: Dow has announced its plan to close its PO plant located in Freeport, Texas, by the end of 2025, aiming to optimize cost structures and ensure long-term value creation. This decision epitomizes the self-adjustment of the global chemical industry under multiple pressures such as economic slowdown, rising energy prices, stricter environmental regulations, and intensified competition in Asian markets.

· Closure of the Argentina Polyols Plant: Similarly, Dow has made the decision to terminate the production of 50 ktpa of polyether polyols at its plant in San Lorenzo, Santa Fe Province, Argentina. The plant had long been facing the issue of low operating rates due to an oversupply of polyols in the global market, coupled with Argentina’s deteriorating economy, high inflation, and sluggish domestic demand. These factors made it challenging to maintain smooth operation. This move reflects Dow’s reevaluation of its global asset portfolios and strategic adjustments to improve asset efficiency and focus on businesses with greater growth potential.

Argentina’s Rio Tercero Shut down TDI Plant

Argentina’s Petroquimica Rio Tercero shut down its 28 ktpa TDI plant on October 14, 2024, due to global oversupply and its inadequate competitive edge.

Dow Underwent MDI Force Majeure In North America

Between May and September 2024, Dow’s North American MDI plant underwent force majeure due to hurricanes and supply disruptions from upstream raw material supplier Olin. The 340 ktpa plant kept a low operating rate even after resuming production, further highlighting the impact of natural disasters on the stability of chemical supply chain.

2. M&As: Restructuring and Strategic Transformation

LANXESS Sold Urethane Systems Business

On October 3, 2024, German specialty chemicals giant LANXESS sold its Urethane Systems business to Japanese UBE Corporation for nearly EUR 460 million, signaling the company’s exit from the last remaining polymer business to undergo a transformation towards a pure-play specialty chemicals company. The aim of this sale is to strengthen its overall competitiveness through portfolio transformation.

Covestro to be Acquired by UAE’s Oil Giant ADNOC

In the same month, Abu Dhabi National Oil Company (ADNOC) agreed to buy Covestro, providing financial support to avoid the risks of layoffs and strategic contraction due to deteriorating market conditions. ADNOC’s involvement not only supports Covestro’s “Sustainable Future” strategy but also helps achieve its growth targets. This acquisition will provide ADNOC with access to a leading global platform for MDI, TDI, polyols production and chemical materials development, extending its strategic positioning from upstream to downstream applications.

3. Capacity Expansions: Strong Momentum of Chinese Enterprises

Amidst a general contraction in the global polyurethane industry, Chinese enterprises are demonstrating robust growth momentum.

Wanhua Chemical’s Expansion Plans: Wanhua Chemical has increased its MDI capacity to 800 ktpa and TDI capacity to 250 ktpa in Fujian; besides, its Yantai site will see an additional 850 ktpa of polyols capacity, showcasing its ambitions in the global polyurethane market.

Capacity Expansions at some Chinese polyols company in 2024  Some small and middle companies are also adding new polyols capacities, further solidifying China’s position in the global polyurethane industry chain.