For about three months now, the Iran conflict has been having a massive impact on the global economic situation, in addition to its devastating consequences for the people directly affected. Back in March, we therefore provided information in an article on the effects on the PUR market situation. The focus of that article was the role of gas in the production of PUR. Gas prices have remained at a very high level ever since, as can be seen in indices such as the ICE Endex Dutch TTF Natural Gas Futures. However, other intermediate products also play a significant role in the production of PUR.
The Role of MDI Polymer in PUR Production
MDI Polymer (polymeric isocyanate) is one of the two indispensable main components in the production of thermoplastic polyurethane granules (TPU). MDI is the decisive stability factor for the subsequent extrusion of polyurethane tubing. It ensures that the plastic melt remains dimensionally stable and flows evenly during the production process. In the final product, the chemical structure of MDI results in extreme tear resistance, flexibility, and pressure resistance in the tubing.
MDI polymer is therefore considered a key price driver and leading indicator for the entire PUR market. Prices for this intermediate product have been rising steadily since the start of the Iran conflict. This is forcing many manufacturers of PUR granules to pass on the increased costs to processors such as PAPUREX.
PAPUREX stays the course – no price pass-through to stabilize the supply chain
This cost pass-through from manufacturers to processors has now affected PAPUREX for the second time. Following an initial price increase across the entire product range, we have now received another comprehensive price increase from our main supplier. As is well known, there are two options in such a situation:
- Pass on the increased prices along the supply chain to protect the profitability of our own production
- Do not pass on the prices to ensure stability along the supply chain
After carefully weighing these options, PAPUREX has decided to maintain its current course and not pass on the increased prices to customers. This is only possible thanks to streamlined internal processes and the sacrifice of our own economic buffer. It is also clear that this cannot be sustained in the long term if the price situation continues to deteriorate. Nevertheless, PAPUREX stands for stability and reliability for its partners. Below you will find a download link to the management’s official statement on this topic.