Product profile: Polyether polyols

17 February 2003 00:00  [Source: ICB]

Flat demand and disastrous margins are likely to herald more asset rationalisation in the near future as players fight to pull their businesses back into profitability
 
Uses

Polyether polyols' major use is in polyurethane foams. Flexible foams are primarily used in cushioning applications such as furniture, bedding and car seats, and in carpet underlay. Rigid foam's largest consumer is the construction industry where it is mostly used for insulation. Rigid foam is also used in commercial refrigeration and packaging. Smaller uses for polyether polyols include elastomers, adhesives and sealants, surface coatings and polyurethane fibres.

Supply/demand

Western Europe is the world's largest supplier accounting for about 36% of world capacity which stood at 5.7m* tonne/year in early 2002. West European production was just over 1.4m* tonne in 2001 with demand just over 1m* tonne and net exports of 394000* tonne. East European output was 44000* tonne versus demand of 142000* tonne. Players say demand has been flat in Europe for the last two years and no significant change is expected in 2003.

Restructuring in the last three years has included Huntsman's purchase of ICI, Bayer's purchase of Lyondell and Dow's acquisition of EniChem's polyurethane assets. Bayer closed its 95000 tonne/year plant in Rieme, Belgium, at the end of 2002. More consolidation, including the closure of small and inefficient plants, is expected in the future as producers continue to cut costs and analyse plant utilisation rates.

Prices

European prices are in the range E1150-1250/tonne for flexible polyols with speciality and rigid at E1400-1500/tonne. Producers announced an increase several times last year and were finally successful in raising prices in the second half, from an average E1050/ tonne. Producers say price erosion over the last few years and very high feedstock costs have hit margins badly and current levels are below reinvestment economics. Another price rise is being mulled for April.

Technology

Polyether polyols are produced by the catalysed addition of epoxides, mainly propylene oxide or ethylene oxide, to an initiator having active hydrogens. The most common catalyst is potassium hydroxide. The reaction is carried out by a discontinuous batch process at raised temperatures and pressures under an inert atmosphere. After polymerisation, the catalyst is neutralised and removed by filtration. The polyol is then purified.

The choice of epoxides, initiator, reaction conditions and catalyst determines the physical properties of the polyol which can range from low molecular weight polyglycols to high molecular weight resins. Bayer's Impact technology is based on a zinc hexacyanocobaltate catalyst and has lower energy needs and waste.

Outlook

Demand growth in western Europe is forecast at 2.5-3%/year through 2006, slower than in previous years. Growth in flexible foam will only be about 1.5%/year as the major markets like furniture and bedding will be stagnant or even decline, although the automotive sector will see further growth of about 2%/year. Consumption into rigid foam is expected to grow by an average 4%/year to 2006. The non-foam sector will see demand growth of 4.0-4.5%/year.

West European production will rise to over 1.6m tonne/year by 2006 to meet export demand from the faster-growing markets of eastern Europe, Africa and the Middle East.

Growth in Asia is put at 3-5%/year (excluding Japan) but the fastest growth is in China where demand will rise by 7-9%/year. Shell's complex being built in Huizhou, China, includes a 170000 tonne/year polyols plant with startup due in late 2005. Shell will also start up a 50000 tonne/year polymer polyols plant in Pernis, Netherlands, this year.

*data are for urethanes use only
SRI provided data for this report. Contact sales@sric.ch

European polyether polyols capacity, '000 tonne/year*
Company Location Capacity

BASF

Antwerp, Belgium 135
Ludwigshafen, Germany 56
Schwarzheide,
Germany 100

Bayer

Antwerp, Belgium 205
Dormagen, Germany 210
Fos, France 150

Dow Chemical

Priolo, Italy 68
Tarragona, Spain 60
Terneuzen, Netherlands 385
Tertre, Belgium 65

DuPont Dow Elastomers

Dordrecht, Netherlands 40

Huntsman

Rozenburg,
Netherlands 30**

ICI France

Chocques, France 45

Nizhnekamskneftekhim

Nizhnekamsk, Russia 45

Novacke Chemicke Zavody

Novaky, Slovakia 8

Oltchim

Rimnicu Vilcea,
Romania 20

Repsol YPF

Puertollano, Spain 70
Tarragona, Spain 130

Resina Chemie

Foxhol, Netherlands 7

Sodaso Polihem***

Tuzla, Bosnia 25

Shell Chemicals

Carrington, UK 50
Rotterdam, Netherlands 200

Solvay

Tavaux, France 10

Synthesia Espanola

Barcelona, Spain 10

Zaklady Chemiczne Rokita

Brzeg Dolny, Poland 30

* based on standard product mix

** rigid capacity only (part of multi-product unit)

*** operational status unknown

Source: SRI Consulting/ECN




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