Fantastic plastic

02 November 1998 00:00  [Source: APC]

The plastics additives industry is being forced to retreat and regroup in the face of falling returns. Alan Tyler reports on the new-look industry

The plastic additives industry is going through a period of restructuring driven by falling margins. Throughout the industry, whose key areas are antioxidants, flame retardants, heat stabilisers, PVC plasticisers and light stabilisers, companies are developing a commodity approach to service their increasingly globalised businesses.

The largest single market for plastic additives is the US. According to research conducted by Frost & Sullivan, revenues for the total US market were estimated to be $2bn in 1997, and are expected to grow this year and next.

Significant growth opportunities for plastic additives include antioxidants for polyolefins, flame retardants for computer housings, and light stabilisers for automotive applications. Some end-user markets with high growth rates are polypropylene, high density polyethylene, electronics and automotive and construction applications.

Globalisation is increasing the need for broader distribution channels, intensifying competition and pushing prices lower. Mergers and acquisitions are common as large companies search for acquisition candidates to broaden product lines and add distribution channels or technology.

Regulatory, environmental and health concerns play an important role as the plastic additives market struggles to minimise their impact. Halogen-containing compounds are an issue with some classes of flame retardants, while some phthalate plasticisers have been linked to endocrine disruption, presenting health concerns. Regulations limiting volatile organic compounds present concerns to the PVC plasticiser manufacturers and users. These concerns are a real issue for plasticiser, heat stabiliser and flame retardant manufacturers.

The polyethylene and polypropylene resin manufacturers are demanding more performance from new antioxidant chemistries in order to lower their additive costs, but only the additive suppliers with the deepest pockets can afford to try. Development is also being spurred by 'one-package' additive blends, although manufacturers are expected to focus more on customer development than on research. Design support, technical service and closeness to the customer are becoming crucial for the plastic additives market.

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Companies compete at all levels of the plastic additives supply chain. With the major speciality chemical manufacturers at the top, the second level is composed of the plastic additives processors who blend, compound, or grind additives into forms readily handled by end users.

Resin manufacturers, compounders and concentrate manufacturers who blend additives into their final products stand at the third level of the supply chain, and the end user is at the fourth. The bulk plastics industry is now a mature market and as such no dramatic pick-up is expected, although it can boast higher than average growth in thermoplastic olefins, styrenics and engineering plastics.

While flame retardants are expected to become an important component in an increasing range of polymer applications, the question over the possible conflict in the chemistry of flame retardancy and recyclability has not yet been addressed by the market. It is moving away from lead-based stabilisers, chlorinated hydrocarbons, and brominated flame-retardants - all driven by environmental issues.

The plastic additives industry is characterised by an increase in masterbatches and the use of customised blends as part of a general movement for suppliers to be in much closer partnership with clients - with all the technical support and distribution network required.

Increasingly, the market is becoming dominated by large chemicals multinationals or large companies with specialised raw material interests. Once a company is able to take a market position in a particular compound, it is likely to market that compound on a pan-regional basis.

As the chemistry becomes more complex, the problems of manufacturing control become more significant; even the key market players find themselves moving into more concentrated areas of the market rather than supplying additives across the board.

Innovations are rife in the additives sector as producers battle to keep costs competitive and to comply with stringent environmental regulations. Environmental considerations are increasingly driving the plastic additives business, but at the same time users still demand improved performance, so the continual development of new products is essential for success.

Although plastic additives is not usually considered a dynamic area for the introduction of new technology, a number of companies have developed new products to lower production costs and increase performance properties.

Colorants is another area of intensive development. BASF's range of Paliocrom pigments, although mainly used in paints, is increasingly being used in plastics coloration. These pigments are distinguished by their unusual optical properties.

They can produce effects similar to the lustre of mother-of-pearl or silk, with the colour surfaces appearing in various hues or shades of light and dark, depending on the viewing angle.

Changes in technology are not only affecting the additives themselves, but also the means for delivering them. The US company MA Hanna has developed new specialised compounding technology, producing a proprietary line of polyolefin masterbatch materials that can help injection moulders reduce costs and inventories while improving end-use product quality. The materials, known as Maxbatch, are designed for manufacturers currently using a variety of standard, press-ready polyolefin compounds for high-volume production of injection molded parts such as consumer appliance components and casual furniture.

The products use a polyolefin resin to carry calcium carbonate, talc or other fillers and additives in a highly loaded pellet form. These concentrated pellets are then blended with neat resins to provide precise amounts of fillers and additives. 'This specialised compounding technology provides highly filled polyolefins for moulders to let down with unfilled polyolefins to achieve the same production results as with fully compounded material,' says Matt Marnell, product specialist for polyolefin resins at MA Hanna Engineered Materials.

Industry research suggests that one of the largest growth areas in the next few years may be conductive polymers, which will provide a 175 000 tonne market for base resins which will be fostered by compound, processing and additive improvements, according to the Freedonia Group, a Cleveland-based industrial market research firm.

Product components will remain the largest conductive polymer market and provide opportunities based on heightened requirements in housings, rollers, trays and other electronic parts.

Acrylonitrile-butadiene-styrene (ABS) and polyvinyl chloride (PVC) will remain the dominant resins as a result of performance, cost and processing advantages over other resins and materials. Contributory growth factors include the increased sensitivity and power of electronic devices, more stringent regulation of electronic noise, rising raw material costs and continued electronics product diffusion, especially in higher-end products.

ABS, PVC, polyphenylene-based resins, polycarbonate and polyethylene resins account for 70% of all conductive polymers used. ABS will remain the leading resin, based on the material's high impact strength. However, PVC will present the best opportunities because of the resin's lower cost and design and processing ease. Polyphenylene-based resins, such as polyphenylene sulfide, will increasingly be used where high temperature and chemical resistance are required, such as in motor vehicle components.

However, Freedonia said that product components will provide the best market opportunities for conductive polymers due to widespread applications in housings and enclosures based on advantages over metal in weight, cost and design features.

Demand will be stimulated by the high levels of static electricity developed by moving parts and needs to control electromagnetic interference/radio frequency interference emissions.

Antistatic packaging will exhibit good growth based on its cost effectiveness in protecting sensitive electronic devices from static discharges during all stages of production including assembly, handling, transportation and storage. Continued growth is anticipated for products that provide electrostatic discharge (ESD) protection for packaging, flooring and other products.

Eastman has also purchased Ernst Jäger, Fabrik Chemischer Rohstoffe GmbH, a German manufacturer of speciality polymers used by formulators of architectural and industrial coatings, printing inks, adhesives, sealants and floor care products. Terms of the acquisition were not disclosed.

James Chitwood, president, Europe, Middle East and Africa, says: 'The Jäger acquisition will provide us with our first manufacturing plant in the European region dedicated to the supply of speciality polymers to formulators of coatings, adhesives, sealants and floor care products.

'This acquisition is part of the company's total effort to enhance our growth in the specialty business arena, which is characterised by high returns and low cyclicality. It is an excellent fit with our current coating inks and resins and performance chemicals businesses and with Eastman's waterborne products.'

Dan Watson, director, waterborne polymers, says: 'The Jäger acquisition is the latest in a series of strategic acquisitions designed to support and expand our waterborne products effort. It will broaden and enhance many of our present market and product portfolios for the supply of speciality polymers in the global marketplace. The Jäger acquisition will significantly add to our core competencies supporting our waterborne products. 'By combining the strength of both companies, we will be able to create more sustainable long-term growth than as individual companies. Jäger will become an important avenue to quickly move our new waterborne technologies into the European marketplace.'

Jäger has manufacturing facilities in Düsseldorf and Hamburg and sales offices in Germany, France, the Netherlands, Switzerland and Singapore. Eastman's first acquisition in Europe, Jäger will be operated as a wholly owned subsidiary.

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