Growing polyurethanes demand spurs investment

01 March 2011 21:09  [Source: ICB]

Booming manufacturing sector draws capacity additions to China

Manufacturers of polyurethanes (PUs) are fond of claiming that no other resin is so versatile. They may be right: they are employed in countless diverse applications and demand for the material has grown at a high rate for decades. A slew of new manufacturing capacity currently in the works reflects producers' bullish expectations that the market will ­continue to grow, particularly in the Asia-­Pacific region.

"The growth of the global PU market since 1971 was constant until late 2008, when global demand started to drop as the economic crisis took effect," remarks Richard Northcote, head of strategic communications at Germany-based Bayer MaterialScience (BMS). "However, the market bounced back in 2010, and currently there is strong demand in the important markets for PU, including consumer products, especially in Asian markets," he adds.

Global demand for PU totaled about 13m tonnes in 2009, according to BMS, and the company expects average annual growth of 5% in the short term. The Asia-Pacific region was the largest regional market, accounting for 40.5% of demand. The combined Europe/Middle East/Africa market followed, with 36.8%. North America accounted for 18.2% of the total, and Central and South America contributed the remaining 4.5%.



PUs are produced by the reaction of polyisocyanates with polyols in the presence of a catalyst.

The polyisocyanates most commonly used are the benzene derivatives toluene di-isocyanate (TDI) and methyl diphenylene di-isocyanate (MDI). Others include the aliphatic compounds hexamethylene di-isocyanate (HMDI) and isophorone di-isocyanate, which are made in comparatively small volumes.

The range of polyols used is much broader. Two types - the polyether polyols and the polyester polyols - dominate by far, but even within these two categories, there is great diversity. In part, this reflects the flexibility of polyol synthesis, but it also reflects the great influence polyols have on PU properties.

Polyether polyols are synthesized by the reaction of an epoxide, such as propylene oxide (PO) or ethylene oxide (EO), with an active-hydrogen starter compound such as glycerin, sorbitol, sucrose or toluene diamine. Polyester polyols are manufactured by the esterification of diacids, such as adipic acid, with glycols, such as butanediol (BDO). Feedstocks and molecular weight can be varied widely.

Depending on the pairing of polyisocyanates with polyols and the reaction conditions, PUs can be adjusted for such characteristics as flexibility and rigidity, abrasion and tear resistance, tensile strength, load-bearing ability, chemical resistance and electrical properties.

 "The market bounced back in 2010, and currently there is strong demand for PU"
Richard Northcote, head of strategic communications, BMS
Demand for MDI is growing at an average annual rate of 6%, globally, versus 4% for TDI, says BMS. The company puts growth in demand for polyols at 4%.

One of the most widely exploited features of PUs is their capacity to be foamed. Flexible foams accounted for 30-40% of PU demand in Europe and North America, according to a 2009 estimate cited by BMS. Rigid foams accounted for another 30%. Coatings, adhesives, sealants and elastomers (CASE) made up the remainder. In Asia, where the thermal insulation market is much less developed, foams accounted for a much smaller proportion of demand. CASE products accounted for proportionally more.

Among industries, the greatest consumer of PUs is furniture and wood, with 30% of global demand in 2009, says BMS. Flexible PU foams are used in seating and bedding, while PU-based coatings, adhesives and sealants are used in the manufacturing process.

Construction accounted for 25% of the PU market. Demand for rigid foam thermal insulation is growing quickly, driven by rising energy costs and more stringent building regulations, while coatings, adhesives and sealants also see extensive use.

Manufacturers of electrical and electronic products consumed 8% of global PU output, using the material for electrical insulation, encapsulation and various parts. The footwear industry, which uses PUs to make elastic and durable shoe soles, accounted for 7% of the market. The remaining 15% was consumed by a grab-bag of other industries for such products as seals and gaskets, elastomeric wheels and tires, automotive suspension bushings, Spandex fibers, carpet underlay and hard plastic parts.

Not surprisingly, PU demand growth is weighted toward Asia, and the global players are making major capital investments to augment their presence in the region.

BMS, for example, announced in December plans to spend €1.0bn ($1.4bn) to expand capacity for the production of PU and polycarbonate (PC) at its facility in Shanghai, China. BMS will increase MDI capacity at the site to 1m tonnes/year by erecting one new 500,000 tonne/year plant while expanding an existing 350,000 tonne/year plant to 500,000 tonnes.

Existing HMDI capacity in Shanghai will also be expanded, and a new 50,000 tonne/year facility is planned. Three new PU system houses are also being built in China.

German chemical giant BASF has also announced expansions in China. Last April, the German company announced plans for a PU solutions systems house in the western city of Chongqing, where the company also plans a 400,000 tonne/year MDI plant. A plant focused on automotive spring aids and top mounts made of microcellular PU is expected to come on stream in Shanghai this year.

US chemical company Huntsman, which already has a 240,000 tonne/year MDI plant near Shanghai, intends to expand capacity there, subject to Chinese government permission.

Regional players are also investing to supply the booming local market. For example, Yantai Wanhua recently began production at a new 300,000 tonne/year MDI plant in Ningbo, Zhejiang province. The company already had a 200,000 tonne/year plant in Yantai, Shandong province. It is also considering a 15,000 tonne/year HMDI plant and a 50,000 tonne/year polyether polyols unit for Ningbo.

Yantai Juli Isocyanic Ester is building a $264m (€191m), 45,000 tonne/year TDI plant in Laiyang City, Shandong province, that is scheduled for commissioning later this year.

Shandong Dongda Chemical Industry (Group) last year expanded polyether polyols capacity from 160,000 tonnes/year to 200,000 tonnes/year, and the company, which claims to be China's largest producer of the product, says it plans to install 500,000 tonnes/year of capacity by 2015.

Investment continues elsewhere, as well. Last March, BMS announced that a €150m, 300,000 tonne/year TDI plant is slated for its facility at Dormagen, Germany. The new plant, which uses a new, energy- and solvent-efficient manufacturing process, will replace older facilities at Dormagen and nearby Brunsbuttel.

BASF recently opened a PU solutions systems house in Poland, and another is expected to open this year in Cartagena, Colombia.

US-based Dow Chemical is likewise paying attention to Latin America, opening a technology and market development center for PUs and formulated systems in Sao Paulo, Brazil, in January.

In 2009, the company expanded polyol production in Freeport, Texas, US, and Terneuzen, the Netherlands, and MDI capacity in Freeport and Estarreja, Portugal.

In the Middle East, Saudi Advanced Industries Co. and compatriot Tasnee have announced plans for a 120,000 tonne/year polyether polyols plant in Rabigh, Saudi Arabia, to come on stream in late 2013.

Keep up with the latest developments in polymer markets on the ICIS blogs

By: Clay Boswell
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