Foreign Enterprises vs China Players! Polyurethane Elastomer Market Analysis

Polyurethane (PU) elastomer is a synthetic material with elastomeric properties, produced by the reaction of diisocyanates, polyols, and, in some cases, chain extenders. Commonly used polyurethane elastomers include thermoplastic polyurethane elastomer (TPU) and casting polyurethane elastomer (CPU).

TPU has a wide range of applications, including pipes, films, footwear materials, mobile phone cases, etc. Each application field has many sub-markets; for example, films are divided into low-transparency blown films, medium-transparency films, high-transparency films, ordinary cast films, easy-to-cut cast films, hot melt adhesive films, and so on. CPU has excellent wear resistance and oil resistance, making it difficult to replace in special-purpose fields. CPU is one of the non-metallic materials that best meet the requirements in mining and metallurgical fields and can replace some metal materials. Its main applications include screen plates, linings, and lining blocks.

In the context of differentiated consumption growth rates, major manufacturing companies are actively seeking differentiated development strategies to adapt to market changes. Leading companies in the polyurethane elastomer industry are making frequent moves. International giants such as BASF and Covestro are continuously expanding their presence in the Chinese market, while domestic leaders like Wanhua Chemical and Miracll Chemicals are also accelerating the advancement of their polyurethane elastomer business layouts, collectively driving the rapid growth of the domestic polyurethane elastomer market.

The global supply of polyurethane elastomers is shifting towards the Asia-Pacific region.

The main global manufacturers of polyurethane elastomers include BASF, C.O.I.M, Covestro, DIC Corporation, Lubrizol, and TOSOH, with a high concentration of production. Among them, Lubrizol has successively acquired polyurethane elastomer-related divisions and companies such as the American companies Noveon and Dow Chemical, becoming the supplier with the most comprehensive product line and the largest supply volume of medical-grade polyurethane elastomers worldwide.

With the slowdown of economic growth in the European region, the global supply of polyurethane elastomers is shifting towards the Asia-Pacific. In January 2024, BASF’s Zhanjiang site commissioned its second TPU plant; in September, Covestro began constructing its largest TPU factory in Zhuhai, which, upon full completion in 2033, will have a maximum annual capacity of up to 120,000 tons. At the same time, Covestro announced the establishment of a new TPU Asia-Pacific Application Development Center in Guangzhou, China, originally planned to commence construction by the end of 2024 and start operations in 2025 (current progress unknown). In October, LANXESS sold its polyurethane business to Japan’s Ube Industries, Ltd. In November, Yantai Wanhua commissioned the world’s largest single-line TPU production line.

It is expected that in the coming years, the supply of TPU in the Chinese market will be sufficient, demand will slow down, and competition will intensify.

TPU is typically produced by a one-step or two-step reaction between pure MDI (or MDI variants) and polyols. The properties of the polyols used determine the main differences between TPU grades. The main types of polyols are polyether polyols, polyester polyols, and polycaprolactone, with global market shares of 25%, 65%, and 10% respectively.

To meet the needs of different market applications, there are over a hundred standard formulations of TPU. In the actual production process, to ensure product quality, some types (of the same series) of TPU materials can be produced on the same line. Some special TPUs are made from the reaction of p-phenylene diisocyanate (PPDI) and polycaprolactone-based polyols; other specialty TPUs can be used to bridge the gap between rigid plastics and rubber elastomers. For example, TPU/PC blends can improve the toughness, stress cracking resistance, notch sensitivity, solvent resistance, and chemical resistance of PC, while also reducing the molding processing temperature of PC.

China's TPU production capacity and output are growing rapidly, with new capacity continuing to come online in the future, leading to a relatively ample supply. TPU consumption growth is slowing down, while the film and pharmaceutical sectors will continue to drive demand. Overall, it is expected that in the coming years, the TPU market in China will have sufficient supply, slower demand growth, and increasingly intense market competition.

In the past five years, China's TPU industry has experienced rapid capacity expansion, but the operating rate remains low. From 2019 to 2024, the compound annual growth rates (CAGR) of China's TPU capacity and output were 10.5% and 12.2%, respectively. In 2024, China's TPU capacity reached 1.5 million tons per year, with new capacities including BASF's 32,000 tons per year (put into operation in June) and Wanhua Chemical's 50,000 tons per year (handed over in November). China's TPU output increased to 830,000 tons.

There are about 35 domestic TPU manufacturers in China, with production capacity relatively dispersed. The top five companies—Wanhua Chemical, Huafon Chemical, Mery New Materials, Innova New Materials, and Baoding Bangtai—together account for 50% of total capacity. Leading enterprises continue to strengthen their production capabilities and technologies, while smaller companies lack competitiveness, resulting in intense industry competition. China’s TPU production is mainly concentrated in mid- to low-end products, while high-end products are primarily supplied by foreign companies such as Lubrizol and BASF. In recent years, the quality of TPU film products from Mery New Materials and Wanhua Chemical has begun to rival those of foreign companies.

From 2019 to 2024, China's TPU import volume shows an overall downward trend, while export volume increases year by year. In terms of imports, foreign-funded enterprises are the main players, and domestic TPU temporarily finds it difficult to replace some imported TPU sources. However, the decline in import volume also reflects the gradually increasing competitiveness of domestic TPU companies in the high-end market. On the export side, the rapidly increasing inflation in Europe and the United States has impacted overseas processing costs, leading to increased external procurement demand. However, due to India's protective policies, the Sino-US trade war, and the EU's carbon tariffs, the cross-border shipping costs have significantly increased, making the growth of China's TPU export volume relatively limited. In the future, as the competitiveness of domestic enterprises' products increases, the net export volume is expected to further increase.

From 2019 to 2024, China's TPU consumption has an average annual compound growth rate of 10%. Shoe manufacturing and TPU films have been the main drivers of TPU consumption growth over the past five years.

TPU is mainly used as shoe materials, films, hoses, etc., and is applied in fields such as footwear, automotive, textiles, and medical. In 2024, China's TPU consumption is expected to increase to 720,000 tons, a year-on-year growth of 8.1%. This growth is mainly attributed to the increased demand for TPU in automotive films and the popularity of expanded TPU in high-end sports shoes. The footwear industry remains the largest source of TPU consumption, accounting for 29%; the consumption in films, sealing materials, hoses, and automotive fields accounts for 20%, 17%, 15%, and 10%, respectively.

Although China is no longer the largest footwear producer, the consumption of TPU continues to grow as elastomer materials such as ethylene-vinyl acetate copolymer (EVA) and polyvinyl chloride (PVC) are gradually being replaced by TPU in shoe manufacturing. TPU can be used for shoe outsoles, providing excellent wear resistance, flex resistance, and fatigue resistance. It can also be used in the air cushion part of the midsole, offering good resilience and shock absorption.

Due to its excellent waterproof, moisture permeability, and mechanical properties, TPU is widely used as a membrane material in textiles and inflatable materials. In textiles, representative products include Breathtex from Borealis and Dintex from DingZing; inflatable materials include inflatable life jackets, diving BC jackets, life rafts, inflatable boats, inflatable tents, military inflatable self-expanding mattresses, massage air bags, medical anti-decubitus mattresses, and specialized waterproof backpacks. In recent years, there have been technological breakthroughs in automotive TPU films, with increasing usage year by year. The technical threshold for TPU films is relatively high, with stringent requirements for film thickness, uniformity, strength, and other properties.

TPU, with its oil resistance, high temperature resistance, high pressure resistance, and compliance with food-grade standards, can be used as sealing rings in the automotive industry, hydraulic and pneumatic systems, food industry, and medical devices.

Trachea, catheters, infusion tubes, and other medical materials made from TPU have good blood compatibility and do not affect blood components, making them widely used in the medical field. TPU does not face the plasticizer migration issue associated with PVC materials, hence its usage in medical applications has been increasing.

TPU stands out for its excellent wear resistance, flex fatigue resistance, and high elasticity, making it suitable for various automotive components such as gear shift lever handles, coupling bushings and washers, wiring harness connectors, coiled retractable wires, and cable sheaths. It can also be compounded with other plastics or rubber for use in automotive bumpers, airbags, dust covers, and other parts.

From 2024 to 2028, the consumption growth rate of TPU downstream demand is expected to remain around 4%, mainly driven by films and medical soft tubes. With the increasing demand for outdoor sports equipment, the consumption growth rate of TPU films will reach approximately 8%; as medical standards improve, the demand growth rate for TPU medical soft tubes will be about 6%; consumption growth in other application areas is relatively low.

In terms of the segmented product market prices for TPU in China, TPU film has the highest price, while the prices for TPU used in shoe materials, pneumatic tubes, and phone cases are relatively similar. In 2022, the average market price for TPU film in China was 23,000 RMB/ton, while the average market price for TPU used in shoe materials, pneumatic tubes, and phone cases was 18,800 RMB/ton, with a price difference of 4,200 RMB/ton. In 2023, TPU market prices fell continuously, with the average price for TPU film at 17,400 RMB/ton per year, and the average price for TPU used in shoe materials, pneumatic tubes, and phone cases at 15,800 RMB/ton, reducing the price difference to 1,600 RMB/ton. In 2024, prices further declined, with the average prices for film and phone case TPU at 16,100 RMB/ton and 14,700 RMB/ton respectively, representing year-on-year decreases of 7.1% and 6.3%.

Currently, domestic manufacturers mainly produce low to mid-range TPU products, while mid to high-end TPU products need to be imported from overseas at relatively high prices. The downstream applications of low to mid-range products are quite broad, with a dispersed customer base, and the market overall is characterized by large capacity and intense competition. In 2024, the average gross profit margin of the TPU industry in China is around 15%, with low-end products having a gross profit margin between 10% and 15%, and high-end products having a gross profit margin of approximately 25% to 35%.

The future demand for the polyurethane elastomer market is generally stable, but there is a structural differentiation. Mid-to-low-end products have a wide range of applications and a dispersed customer base, resulting in a large market capacity but also sufficient supply and fierce competition. The mid-to-high-end market participants are mainly foreign leaders, while domestic companies such as Wanhua Chemical and Miracll New Materials have initially established a foothold in the high-end market. In niche areas such as cable protection, automotive anti-lock braking systems, wind power cables, medical catheters, implantable products, automotive coatings, and injection-molded TPU products, the market for high-performance products is still dominated by multinational companies such as BASF, Covestro, and Lubrizol.

The main sources of automotive TPU film in China are imports from companies such as BASF, Covestro, and Lubrizol. However, domestic enterprises like Wanhua Chemical and Meirui New Materials are gradually gaining market recognition for their products. Wanhua Chemical has rapidly captured the TPU film market by leveraging its cost advantage to lower product prices, which has also driven the vigorous development of downstream applications. For example, in the automotive sector, the installation rate of TPU paint protection films has increased significantly.