Covestro and Dow Declare Force Majeure on North American MDI Production

On May 19, 2026, Covestro announced a force majeure on all MDI (methylene diphenyl diisocyanate) products manufactured in North America, citing sudden and unforeseen production failures. Within hours, market reports confirmed that Dow, the other major North American MDI producer, faced parallel operational issues at its own units. Both companies appear impacted by the same root cause, a severe disruption in the supply of carbon monoxide and chlorine, the two essential intermediate feedstocks required for isocyanate synthesis.

The combined output halt removes the bulk of North American MDI capacity from an already strained global market. MDI is the foundational raw material for polyurethane products, with no readily available chemical substitute at industrial scale. Applications affected include rigid foam used for building insulation, refrigerator and freezer cores, automotive seating and interior components, spandex fibers, footwear, adhesives, coatings, and battery pack housings for electric vehicles.

As of May 20, neither producer has issued a public timeline for production restart. Industry analysts expect the disruption to last at least one to two months, given the complexity of restoring stable CO and chlorine feeds and the difficulty of restarting isocyanate units after unplanned outages. The MDI industry remains a tight oligopoly with only seven companies worldwide controlling the technology, and overseas plants are already operating at reduced rates due to European maintenance schedules.

Price reaction has been immediate. Spot quotes in North America jumped 500 to 800 dollars per ton on May 19, with European and Asian markets following the move. Chinese domestic polymeric MDI is trading at 19,000 to 19,500 yuan per ton, while pure MDI has crossed 22,000 yuan per ton, levels more than 30 percent above the same period last year. Market participants warn that the global supply-demand gap could widen to between 1.0 and 1.5 million tons over the coming quarter if North American output remains offline.

Downstream impact is expected to be heavy. Construction insulation suppliers, refrigerator and freezer manufacturers, automotive interior producers, and spandex spinners across North America, Europe, and Asia are reviewing inventories and exploring alternative sourcing. Several large polyurethane processors have indicated they will pass higher input costs to customers in the coming weeks.

The MDI sector had already been under pressure since the start of 2026, with polymeric MDI prices climbing from around 14,300 yuan per ton in January to over 16,500 yuan per ton by March after Wanhua Chemical and other leading producers raised contract levels. The North American force majeure now adds a new layer of supply stress on top of rising US benzene and propylene costs, tight CO and chlorine availability, and disciplined shipment management by leading producers.

Looking further out, new capacity from Wanhua Chemical in Fujian (700,000 tons) and BASF in the United States (200,000 tons) is scheduled to come online during the second half of 2026, which should partially relieve the shortage. However, the long-term trend of overseas capacity withdrawal and rising production costs suggests MDI prices will remain elevated compared with 2025 levels, with a probable central range of 17,000 to 19,000 yuan per ton through the rest of the year.