Polyurethane Dispersions (PUDs) Market in China: 2025 Performance and Future Expectations

The production of aqueous polyurethane dispersions remains inherently costly due to the need for complex equipment, advanced technical expertise and sophisticated formulation processes. Their relatively low solid content can restrict performance in certain demanding applications, while further improvements are still required to enhance low-temperature durability and broaden adaptability.

Against this technical backdrop, the Chinese PUD market has been negatively affected by a weak macroeconomic environment. Economic uncertainty, subdued consumer confidence and sluggish downstream demand have weighed heavily on the sector, leading to a contraction in overall consumption.

The real estate downturn, combined with a general downgrade in consumer spending, has reduced demand for high-end furniture, architectural coatings and related applications, which traditionally rely on higher-cost water-based polyurethane systems. As a result, the wood coatings sector has suffered a notable decline, particularly in northern China, although the southern market has shown relative resilience.

In parallel, intensified global geopolitical tensions, trade protectionism, volatile energy prices and restructuring of international supply chains have created a challenging operating environment for the wider petrochemical and chemical industries. Downstream customers have become increasingly cost-sensitive, favouring more economical alternatives such as water-based acrylics in wood coatings, which now dominate the segment.

Despite these short-term pressures, the medium-term outlook for PUDs in China remains cautiously optimistic. The expected economic recovery should gradually restore industrial activity and consumer confidence, supporting renewed growth in the second half of the recovery phase. The automotive sector, particularly new energy vehicles, represents a major growth engine, as factory basecoats increasingly require polyurethane dispersions to meet performance and durability standards. At the same time, plastic coatings are expanding as global brands accelerate the shift towards water-based technologies for electronics and consumer devices. Environmental regulations continue to tighten, with local governments imposing stricter controls on organic solvents, accelerating the substitution of solvent-based systems with water-based polyurethane technologies.

Source: IAL Consultants

Looking ahead, rising environmental awareness, the expansion of the middle class and increasing demand for safe, high-quality and sustainable products are expected to drive long-term growth. Applications in leather, textiles, footwear adhesives, packaging films, medical materials and speciality coatings are forecast to expand, particularly in premium and customised segments with higher environmental requirements. Although cost remains a major barrier, continuous innovation in formulation, processing and performance is likely to improve competitiveness and reinforce the role of PUDs as a key material in China’s transition towards greener and more sustainable industrial solutions.