14 February 2000 00:00 [Source: ICB Americas]By Ivan Lerner
The global plastics additives market will continue to undergo significant structural changes during the next five years, offering major opportunities and risks for industry participants, according to TownsendTarnell Inc., a Mount Olive, N.J.-based consultancy.
Forces that could significantly alter the plastics additives market include environmental and health regulations (as in the case of phthalates used in PVC toys, or in the debate surrounding halogenated flame retardants), the development of new technologies, and strategic repositioning to improve shareholder value, including mergers and acquisitions, joint ventures and globalization.
"Companies that were previously oriented only in North America or Europe are expanding into other parts of the world, and a lot of that is being done by joint venture," notes Fred Gastrock, project manager for TownsendTarnell.
Customer-driven factors are also shifting the market, according to the consultancy. Producers are increasingly focusing on customer needs rather than their own (as with the proliferation of product lines). TownsendTarnell cites antioxidant producers in Europe, particularly Ciba and Great Lakes. Instead of selling single antioxidants, those companies are offering formulated blends to customers. "In Europe, this idea of blends has really caught on," says Mr. Gastrock.
Because no single company manufactures all 15 types of plastics additives, no producer has more than a 5 percent share of the global market. The 36 largest companies account for 58 percent of global sales, but no producer exceeds $800 million in sales.
Exxon is the largest manufacturer of plastics additives, and it concentrates on plasticizers. It is followed in descending order by Akzo Nobel, Rohm and Haas, Ciba, Great Lakes and CK Witco. "Those top six companies are all within $100 million of each other," Mr. Gastrock says.
"Worldwide volume in 1998 was almost 17 billion pounds," he adds. "By 2003, it will be in excess of 20 billion pounds, with market growth in the 4 to 5 percent per year range." The consultancy notes that although the market may decline, demand does not. The Asian economic crisis caused the global market for plastics additives to decline by 1 percent from 1996 to 1998, but volume actually increased by nearly 6 percent.
Of the 15 varieties of plastics additives, plasticizers and biocides share the lowest growth rate of 3 percent. But the segment accounts for almost $5 billion out of the $14.9 billion (1998) global market, with plasticizers used in flexible PVC accounting for nearly 95 percent of that. "Plasticizer loading in flexible PVC ranges from 20 to 80 percent, with an average of 30 to 40 percent," says Mr. Gastrock.
Flame retardants (FR) are another high-use plastics additive, but that market is less than half as large as plasticizers, almost $2 billion. FRs are followed by heat stabilizers, impact modifiers and processing aids, and, at roughly $1 billion, antioxidants. The consultancy rates all of those as medium-growth markets with projected annual growth rates of 4 to 5 percent.
Other medium-growth additives, with dollar values "into the hundreds of millions," according to Mr. Gastrock, include antiblocking agents, antistatic agents, chemical blowing agents, lubricants and mold release agents, organic peroxides, and slip agents.
Of plastics additives with the highest growth rates (6 to 7 percent), the total global value of coupling agents, light stabilizers and nucleafying and clarifying agents combined is estimated at about $800 million. Those markets are oriented toward polyolefins, particularly polypropylene, according to Mr. Gastrock.
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