The scale of the domestic polyurethane market has steadily increased, and five major industrial regions have gradually formed

1. The production and sales volume of China’s polyurethane market has steadily increased, and the overseas market has become an important focus

China has become the world’s largest production base for polyurethane raw materials and products.Polyurethane chemistry is called polyurethane, referred to as “PU”. Polyurethane materials can be used to produce a variety of products with various properties and uses by changing the chemical structure, specification indicators, varieties, and formula ratios of different raw materials. It is known as the “fifth largest plastic”. Polyurethane materials are the only synthetic polymer materials among all current polymer materials that have application value in seven major fields of plastics, rubber, foam, fiber, coating, adhesive and functional polymers. It is a special organic synthetic material with the most varieties, the widest application and the fastest development among polymer materials. At present, there is no official classification of the types of polyurethane materials in my country. Polyurethane materials can be classified by referring to the classification of subordinate professional committees of the China Polyurethane Industry Association and combining their basic applications.

Figure 1: Polyurethane material classification

In 2026, the market size of polyurethane in china will reach 230.7 billion yuan. With its excellent properties such as good low-temperature flexibility, high impact resistance, energy saving and environmental protection, polyurethane products have been widely used in many fields of production and life, and have gradually become a rational substitute for traditional plastics, rubber, and even metal materials in some fields. With the continuous expansion of the application fields of polyurethane products, the market size of polyurethane products is also expanding. It is estimated that by 2025, the global polyurethane market size will reach 93.1 billion US dollars. China‘s PU industry was founded in the late 1950s and has a history of more than 60 years. With the reform and opening up in the 1980s, domestic manufacturers have successively introduced 10,000-ton-scale polyether production equipment from abroad, thus laying a  china‘s polyurethane industry has achieved great development. At present, China has become the world’s largest production base for polyurethane raw materials and products and the region with the most comprehensive application fields, and the production capacity of major raw materials accounts for more than 1/3 of the global production capacity. According to data from QYResearch and Forward-looking Industry Research Institute, it is estimated that by 2026, the market size of China‘s polyurethane industry will reach 230.7 billion yuan and the industry demand will reach 15.23 million tons.

 Figure 2: China’s polyurethane market consumption scale (10,000 tons）

With the rapid development of China’s polyurethane industry and the acceleration of urbanization, China has become one of the world’s largest polyurethane producers and consumers. According to historical data, China’s annual polyurethane production and consumption reached 14.7 million tons and 12.4 million tons respectively in 2020, both of which maintained a steady increase. At the same time, the export growth rate of some polyurethane products in China is relatively fast, and has maintained a growth trend for many consecutive years. The overseas market has become an important focus forChina’s large-scale polyurethane production enterprises.

Figure 4: Comparison of China’s polyether import and export volumes from 2017 to 2021 (10,000 tons/year)

2. The competition pattern shows oligopoly at the front end and structural differentiation at the middle and back end

Large multinational companies occupy a dominant position in the market. At present, the global polyurethane industry production is mainly concentrated in Western Europe, North America and Asia-Pacific, with a total production and sales volume accounting for more than 85% of the global total. Polyurethane production capacity is mainly concentrated in the hands of large multinational companies such as Dow Chemical, Covestro, BASF, and Shell. They have built production facilities in many places around the world, with relatively typical scale and centralized characteristics, and occupy a dominant position in the market.

The layout of China’s polyurethane industry is regionally concentrated, and five major industrial centers have gradually formed in East China, North China, South China, Northwest China and Southwest China. At present, China has basically formed an industrial layout of polyurethane industry clusters, including the Yangtze River Delta region centered on Shanghai, the Bohai Rim region centered on Yantai-Zibo-Huanghua-Tianjin, the Pearl River Delta region centered on Guangzhou, the Northwest region centered on Lanzhou, and the Southwest region centered on Chongqing and the Haixi region centered on Quanzhou, Fujian.

Figure 5: Industrial layout of China‘s polyurethane industry

Back-end structural differentiation. From the perspective of the polyurethane chemical industry, isocyanates belong to the front-end raw materials for synthesizing polyurethane materials and their products, while the remaining foam plastics, elastomers, polyurethane water-based materials, etc. are all mid- and back-end raw materials. The development of various sub-sectors of China’s polyurethane industry is relatively uneven, and the overall competition landscape is characterized by front-end oligopoly and mid- and back-end structural differentiation. The production of upstream raw materials, especially isocyanates, has high technical and financial barriers and a high degree of industrial concentration. Isocyanate production companies represented by Wanhua Chemical dominate the domestic production of MDI and TDI, forming an oligopolistic situation. The industry’s mid- and back-ends show structural differentiation, and competition is relatively sufficient.

3. Upstream expansion costs are expected to decline, and downstream demand will push industry product upgrades in reverse

Benefiting from the expansion of upstream raw material manufacturers, industry cost pressure is expected to ease. The main raw materials of polyurethane are downstream derivatives of petrochemicals, and their prices fluctuate frequently due to the influence of the macro-economy and supply and demand, which makes it more difficult to control the cost of the polyurethane industry. In recent years, with the frequent expansion of upstream raw material manufacturers of polyurethane, the overall supply has gradually increased, and the cost pressure of the industry is expected to be alleviated.

Downstream demand is specialized, diversified and personalized, and higher requirements are placed on production processes and proprietary formulas. At present, consumers’ demand for polyurethane products has gradually shifted from the original satisfaction-oriented consumption to enjoyment-oriented consumption. The requirements of downstream industries for polyurethane products are also gradually showing characteristics such as specialization, diversification and personalization. Therefore, continuous optimization of production processes and proprietary formulas has become a necessary way for polyurethane companies to maintain their competitive advantage in future market competition.

Figure 6: China’s relevant industrial policies