Simultaneous North American MDI Force Majeures Squeeze Polyurethane Sourcing Costs
Coinciding MDI plant disruptions in North America reduce global production and force buyers to seek alternative supply routes.
Resin Raw Materials
Polymer Input
Basic chemicals and hydrocarbons used in the synthesis of synthetic resins form the foundation of the modern plastics industry. The availability of resin raw materials like ethylene and paraxylene dictates the production volume of polyester and polyethylene. These substances are typically derived from the cracking of naphtha or ethane.
Conversion Process
Manufacturing facilities transform these simple molecules into complex chains through polymerization reactions that require high pressure and heat. Since resin raw materials are highly flammable, the plants that process them are built far from residential areas and are subject to strict safety protocols. The quality of the final resin depends on the purity of these initial inputs and the precision of the catalytic reaction.
Global Sourcing
The price of these commodities is set on international exchanges and reflects the shifting balance of global supply and demand. Because resin raw materials are traded globally, a disruption in one region can quickly affect the pricing of finished plastics in another. Shipping costs for bulk liquids also play a role in the competitiveness of regional manufacturers compared to those located near low cost feedstock sources.
This geographic advantage allows some producers to maintain high margins even when market prices for the finished product are falling.