European chemical profile: Polyols

26 October 2012 09:02  [Source: ICB]

Polyether polyols' major use is in polyurethane (PU) 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 PU fibres.

Polyol production and supply in Europe has been largely stable over recent years. Exceptions include PCC Rokita's capacity expansion at its site at Brzeg Dolny, in Poland, earlier in 2012, which raised the overall nameplate capacity for polyols there from 70,000 tonnes/year to 100,000 tonnes/year.

Oltchim's petrochemical output, including polyols in Romania, has been restricted for more than one year on financial grounds and production was stopped in August 2012 for maintenance, among other reasons.

Demand for flexible polyols in Europe in the main downstream bedding and furniture sectors has varied in 2012 so far, depending on region. In northwest Europe, consumption is flat as it is a more mature market, while in eastern Europe, it continues to perform better, despite the economic uncertainty, buoyed by some underlying growth potential.

Over the same period, demand for rigid polyols into the main downstream construction and insulation sectors has been mixed. While overall construction activity is subdued, because of the lack of investment in new builds, there is still some good momentum in the insulation sector, driven by stricter legislative for thicker insulation to boost energy efficiency.

European slabstock conventional flexible polyol prices increased from the start of this year until May, but the price trend changed in June and July, when flexible polyol prices moved down. Standard polyols are most susceptible to feedstocks and these changes were largely driven by the volatility in propylene feedstock movements in 2012. In August, flexible polyols prices rolled over, despite the unexpected hike in upstream propylene costs.

In September, however, sellers maintained a firm stance and were determined to move prices up, following two consecutive months of propylene increases, but prices then largely stabilised around €1,790-1,910/tonne FD (free delivered) NWE (northwest Europe) in October. The general price stability in October was in spite of slightly softening upstream propylene costs, as sellers said they had failed to recoup the feedstock increases from previous months and market conditions were fairly balanced.

Base rigid sucrose polyol prices, however, firmed from January to April 2012, but then remained steady until September. In September and October, prices were stable at the low end of the range, but with some minor changes at the upper end. In October, prices were assessed at €2,010-2,100/tonne FD NWE.

Base rigid sucrose polyol prices are generally more stable than standard flexible, because it is less affected by olefin price movements, given its olefin feedstock content and its mix of both monthly and quarterly contracts.

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 MaterialScience's IMPACT technology is based on a zinc hexacyanocobaltate catalyst, has lower energy needs and waste, and also allows for continuous operation.

Demand for polyols is estimated to grow by 2-6% in Europe over the next few years, driven by eastern Europe, according to market sources. Some, however, suggest that targets of plus 6% are quite ambitious in view of the soft macroeconomic conditions. European players estimate higher growth potential in the Middle East and Africa of up to 7-8%.

The joint venture Sadara Chemical project between Dow Chemical and Saudi Aramco is an example of the growth potential in fast-growing regions such as the Middle East. The 26-unit chemical complex in Al Jubail, Saudi Arabia, is expected to come on line in 2015 and be fully operational by 2016. The complex will include cracking capabilities, as well as producing more than 3m tonnes/year of petrochemicals, including PUs.

In view of the fact that flexible polyols are needed in combination with toluene di-isocyanate (TDI) to make flexible foam, sources are perplexed that there no plans for new polyols capacity in Europe, despite BASF's and BMS's expansion plans for TDI. The latter's plans include the construction of two world-scale 300,000 tonne/year TDI facilities in Europe, expected to come on stream in 2014, although the numbers include some restructuring of existing TDI capacities. Some players suggest the global supply balances for polyols will need to be fully explored in order to try compensate to some extent for the missing new polyols capacity, but even, so there is no doubt that with the TDI expansion plans for Europe, some polyols expansion in Europe will also be necessary.

NOTE: There are no plant listings available for Europe polyether polyols

By: Heidi Finch
+44 20 8652 3214

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