POLYOLS AND POLYURETHANE MARKET ANALYSIS

The polyols and polyurethane market size is expected to reach US$ 27.30 Bn by 2031, from US$ 18.40 Bn in 2023, exhibiting a CAGR of 5.7% during the forecast period.

Polyols and Polyurethane Market Regional Insights:

• Asia Pacific accounted for a market share of 35.2% in 2023. The polyols and polyurethane market in the Asia Pacific region is propelled by the significant growth of the large end-use industries, such as construction, automotive, furniture and interior, electronics, and appliances, and packaging.
• North America accounted for 26.8% of the market share in the global polyols and polyurethane market in 2023.
• Europe accounted for 15% of the market share in the global polyols and polyurethane market owing to this region has a significant demand for polyurethane products, particularly in the automotive, construction, and furniture industries.

Figure 1. Polyols and Polyurethane Market Share (%), By Region, 2024

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Polyols and Polyurethane Market Analyst’s Views:

The polyols and polyurethane market is expected to witness steady growth in the coming years. The construction industry will be a key driver of demand given the wide range of insulation and sealant applications for polyurethane. Moreover, increasing building & construction activities across developing nations in Asia Pacific and Latin America are likely to boost the polyurethane foam consumption. On the other hand, stringent environmental regulations regarding the use of petroleum-based polyols may moderately restrain market expansion to some extent over the forecast period.

Asia Pacific, led by China, India, and other ASEAN countries, holds immense growth opportunities owing to the rapid industrialization and urbanization rates coupled with rising disposable income in the region. Additionally, many manufacturing companies are shifting their polyurethane production plants to Asia Pacific because of lower labor and material costs. This is anticipated to make Asia Pacific the most lucrative as well as fastest-growing regional market.

Polyols producers are investing heavily in Research & Development (R&D) to develop bio-based and eco-friendly product variants using castor oil, vegetable oil, and other renewable resources. This will help companies cater to the increasing customer demand for sustainable solutions and also comply with the tightening environmental mandates. The thriving automotive and footwear industries also open new vistas for polyurethane applications.

Polyols and Polyurethane Market Drivers:

Rise in construction activities: The rise in construction activities across globe is one of the key factors fueling the growth of the global polyols and polyurethane market. With increasing urbanization and infrastructure development projects, the demand for buildings and construction has seen a significant upsurge over the past few years. Polyols and polyurethanes are widely used in the construction industry for applications like insulation, glazing, roofing, and sealing, among others.

Polyurethane insulation provides highly efficient thermal insulation and helps reduce energy costs. It has low conductivity and allows builders to use thinner insulation layers. This has increased the preference of polyurethane over traditional insulation materials. Furthermore, polyurethane is used in fiberglass-reinforced plastic panels, which are gaining prominence in the construction of walls, floors and roofs, due to their lightweight and durable properties. They provide an aesthetically pleasing look and can be molded into intricate designs. The use of such composite polyurethane panels is expected to rise exponentially in the coming years. For instance, according to World Bank data, the global construction output is projected to increase by 85% between 2016 and 2030, with major contributions expected from China, the U.S., and India.

Demand for insulation and renewable energy applications: The demand for insulation and renewable energy applications has significantly contributed to the growth of the polyols and polyurethane market in recent years. Polyurethane is widely used for insulation in construction as it provides effective thermal insulation and durable walls and roofs that help in reducing energy costs of buildings. With growing awareness and concerns around climate change and energy efficiency, many countries have implemented stricter building codes and regulations that mandate higher insulation standards in buildings. According to the International Energy Agency, the buildings sector accounts for nearly 40% of global energy use and carbon emissions. Thus, tightening of energy efficiency norms is driving increased demand for better insulating polyurethane products from the construction industry.

Another major factor is the rising installation of renewable energy sources like wind turbines and solar photovoltaic (PV) panels. Polyurethane is a key material used in the manufacturing of wind turbine blades owing to its advantages like corrosion resistance, lightweight, and high strength to weight ratio. For instance, according to the International Energy Agency (IEA), the buildings and construction sector accounted for 36% of final energy use and 39% of energy and process-related carbon dioxide (CO2) emissions in 2018.

Polyols and Polyurethane Market Opportunities:

Development of bio-based and green polyols: The development of bio-based and green polyols presents a major opportunity for growth in the polyols and polyurethane market. Bio-based polyols are manufactured from renewable plant-based resources such as vegetable oils, carbohydrates, and natural fats instead of petroleum-based chemicals. They offer advantages over traditional polyols as they have lower toxicity, reduce dependency on fossil fuels, and generate fewer greenhouse gas emissions during production.

With rising environmental concerns and stricter regulations to curb carbon emissions, the consumer demand for sustainable and eco-friendly products is increasing exponentially. For instance, according to a 2020 report by the United Nations Environment Programme, over 90% of global consumers say that sustainability is an important factor when making purchase decisions. Polyurethane manufacturers have recognized this surging consumer preference for green alternatives and have started extensively investing in R&D to develop more bio-based product lines. For example, major players like BASF SE SE, Dow Chemical, and Covestro have dedicated bio-polyol facilities and product ranges that use feedstock such as palm oil, rapeseed oil, and crude glycerin.

The advantages of bio-based polyols directly impact the growth trajectory of the overall polyols and polyurethane market. As bio-based varieties continue to substitute petroleum-based polyols in various end-use industries like construction, automotive, furniture, and packaging, they will drive higher market revenue and volumes over the next few years. Additionally, supportive government policies like mandates for minimum bio-content in products and subsidies for sustainable innovation will encourage polyurethane producers to rapidly scale up their green manufacturing capacities and portfolios. As per a 2021 report by the European Polyurethanes Association, the European Union’s bio-economy strategy aims to increase domestic bio-based chemical production threefold from 2020 levels by 2030. Such initiatives clearly indicate strong future growth prospects for bio-polyols in the industry.

Advancements in nanotechnology: Advancements in nanotechnology have presented both opportunities and challenges for the polyols and polyurethane market. On one hand, nanotechnology has enabled the development of novel forms of polyurethanes like hydrophobic polyurethanes, self-cleaning polyurethanes, etc. that can open up new applications. However, at the same time, it is also restricting the growth of conventional polyols and polyurethane products.

Nanotechnology has led to the development of alternative materials that can substitute polyurethane in certain applications, like coatings, adhesives, and sealants. For example, the introduction of graphene-based coatings provides properties like anti-corrosion and barrier abilities that are superior compared to polyurethane coatings. These graphene coatings have lower permeability for water, oxygen, and other gases. For instance, according to the National Graphene Association, ships coated with graphene-based coatings were able to save 1,000 gallons of fuel in 2020. Similarly, in adhesives, nanocellulose and other nanocomposites are emerging as strong substitutes to polyurethane adhesives due to advantages such as higher strength, lighter weight, and sustainability.

Polyols and Polyurethane Market Trends:

Shift towards sustainable and eco-friendly products: The growing demand for sustainable and eco-friendly products among both manufacturers and consumers has significantly impacted the polyols and polyurethane market in recent years. As one of the largest and most widely used types of plastics, polyurethane faces increased scrutiny over its non-biodegradable nature and potential health impacts. Many major brands and retailers have pledged to eliminate or reduce conventional plastic use to meet societal expectations of greater corporate environmental stewardship and sustainability. This has driven strong interest within the polyols and polyurethane industries to develop new bio-based and recyclable product solutions.

This shift signals that consumer brands are increasingly willing to pay a slight premium for the sustainability claims of bio-based materials. In the U.S., the automotive industry's voluntary pledge to increase bio-based plastics content sparked early commercialization of bio-polyol cocktails able to meet stringent specifications for seating, instrument panels, and headliners ((according to the U.S. Department of Agriculture (USDA) bio-based product portal)). As economies of scale are realized and production costs decline, bio-based alternatives are expected to gain broader market acceptance across construction, consumer goods, electronics, and others. Overall, the trend towards sustainable materials is undoubtedly reshaping innovation priorities, production methods, and applications within the polyols and polyurethane sectors.

Innovation of reactive polyurethanes: The innovation of reactive polyurethanes is having a significant impact on the polyols and polyurethane market. Reactive polyurethanes are more sustainable and environment-friendly compared to traditional polyurethanes, as they can be reused and recycled more easily. They are manufactured by reacting polyols such as polyether polyols or polyester polyols with diisocyanates or polyisocyanates to form polymers that have isocyanate groups attached to the backbone. These reactive groups allow the polyurethane to repolymerize or recycle more effectively.

The ability to reuse and recycle reactive polyurethanes is leading to greater acceptance of these materials from manufacturers as well as customers. It meets the growing demand for sustainable and eco-friendly products.

Polyols and Polyurethane Market Restraints:

Stringent environmental regulations: Strict environmental norms regarding the use of toxic chemicals are putting limitations on the expansion of the polyols and polyurethane market. Polyurethane production involves the use of crude oil-based polyols that emit volatile organic compounds (VOCs) during manufacturing. VOCs are greenhouse gases that contribute to global warming and cause serious respiratory issues. Many regions across the globe have imposed stringent restrictions on VOC emissions from polyurethane manufacturing facilities in the last few years.

For example, regulations under the Clean Air Act in the U.S. restrict VOC emissions to less than 2.9 pounds per 100 pounds of adhesive solid or less than 0.8 pounds per 100 pounds of sealant solid for architectural polyurethane applications. The European Union has placed limits on VOC content in polyurethane products through its Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) regulation. The regulation restricts VOC content to less than 5% by mass for polyurethane adhesives and sealants used indoors. These environmental mandates have made it difficult for polyurethane manufacturers to expand their operations or introduce new products without significantly investing in emission control technology.

Furthermore, many governments across the world are actively promoting the shift towards greener substitutes for petroleum-based chemicals to meet sustainability targets. For example, the European Green Deal aims to replace 10 million tons of fossil-based plastics with sustainable alternatives by 2025. This has increased research on bio-based polyols produced from renewable sources like plant oils and waste biomass, which emit fewer greenhouse gases. While still at a nascent stage, the scaling up of bio-polyol production poses a major long-term challenge for the conventional crude oil-driven polyurethane market. Unless polyol producers adopt low-emission technologies or switch to more eco-friendly raw materials, stringent laws will constrict the industry's ability to increase polyurethane output.

Counter balance: Increase the production of bio-based polyols, which can reduce reliance on petrochemicals and are often viewed favorably by regulatory bodies. These sustainable alternatives are derived from renewable resources such as vegetable oils and can offer similar or superior properties compared to traditional, fossil-fuel-based polyols.

Fluctuating raw material prices: Fluctuating raw material prices have been a significant impediment for the global polyols and polyurethane market's growth trajectory in recent times. Polyols and polyurethane products require crude oil and its derivatives like propylene as key raw materials. However, the prices of crude oil and associated feedstock have witnessed immense volatility over the past few years mainly due to geopolitical uncertainties, supply disruptions, and demand-supply dynamics.

This instability in input costs makes it challenging for manufacturers to implement long-term strategic planning and price their finished goods appropriately. Any sharp and unexpected rise in crude oil and propylene prices directly increases the production costs, thereby squeezing the margins of companies operating in this market.

Counter balance: Consider backward integration by investing in the production of critical raw materials. This is likely to provide more control over the supply chain and insulation from price volatility over the forecast period.

Mergers and Acquisition

• In October 2022, BASF SE collaborated with Remondis Electro recycling, RAMPF Eco Solutions, and machine and systems manufacturer, KraussMaffei. The project’s objective is to create an industrial method that produces high-quality recycled polyols on par with those made from main fossil raw sources. BASF SE SE, headquartered in Ludwigshafen, Germany, is a leading chemical company with a global presence. The company operates through various segments including chemicals, materials, industrial solutions, surface technologies, nutrition & care, and agricultural solutions. Remondis is one of the world's largest recycling, service, and water companies. With over 30,000 employees and around 800 business locations across four continents, the group serves more than 30 million people and many thousands of companies. Remondis Electrorecycling is a subsidiary of Remondis, a Germany-based waste management company that provides recycling, waste disposal, and water management services. Remondis Electrorecycling specializes in the treatment of waste electrical and electronic equipment (WEEE) and offers a wide range of services, including waste collection, sorting, and processing.

Recent Developments:

• In November 2021, Shell Chemicals announced an investment in a 35,000 tons per annum polyols unit at Shell Jurong Island, Singapore. Shell Chemicals is the petrochemicals arm of Shell plc, one of the largest petrochemical producers in the world. The company has a wide range of products that include acetone, aromatics, ethylene oxide, ethylene glycols, alkenes, nonene, phenol, polyethylene, polyols, and solvents. Shell Chemicals has been serving its chemicals customers for more than 90 years, and it operates manufacturing facilities around the world, with major locations in the Netherlands, the U.K., and the U.S. In the U.S., Shell Chemical LP, subsidiary produces approximately 20 billion pounds of chemicals annually, which are sold primarily to industrial markets.
• In October 2021, Huntsman Corporation, opened a new 22,000 tons TEROL aromatic polyester polyols factory at its systems house in Kuan Yin, Taiwan
• Huntsman Corporation is a publicly-traded global chemical manufacturer of differentiated and specialty chemicals serving a diverse range of consumer and industrial markets. The company's product portfolio includes polyurethanes, performance products, advanced materials, and textile effects, among others. Huntsman Corporation operates manufacturing facilities around the world, with major locations in the Netherlands, the U.K., and the U.S. The company is committed to sustainability and innovation, and it has launched a technology portal to foster innovation and manufacturing-driven collaborations. Huntsman Corporation is also dedicated to career development and offers a range of opportunities for advancement and continuous learning.
• In August 2021, Huntsman Corporation expanded its production of specialty amines and polyurethane catalysts in Petfurdo, Hungary.

Figure 2. Polyols and Polyurethane Market Share (%), By Type, 2024

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Top Companies in the Polyols and Polyurethane Market:

• BASF SE
• Bayer MaterialScience AG
• Chemtura Corporation
• COIM
• Dow Chemical Company
• E.I. du Pont de Nemours & Company (DuPont)
• Hebei Cangzhou Dahua Group Corporation Ltd.
• Huntsman Corporation
• Kumho Mitsui Chemicals Incorporation
• Mitsui Chemicals Inc.

Definition: Polyurethane refers to a class of polymers composed of organic units joined by carbamate (urethane) links. It is produced from a wide range of starting materials, leading to various chemical structures, resulting in different forms such as rigid and flexible foams, coatings, adhesives, and electrical potting compounds. Polyurethane is commonly used in the production of flexible and rigid foams, elastomers, coatings, adhesives, and electrical insulation. It is a versatile material with applications in a wide range of industries including furniture, clothing, packaging, and construction.