Market outlook: Solvay and Bayer MaterialScience highlight opportunities at Solar Impulse event

09 August 2013 09:27  [Source: ICB]

The CEOs of Solvay and Bayer MaterialScience talk about advances in polymers and materials for the aerospace and automotive industries, as well as their perspectives on fundamental market issues

There are high hopes for greater use of advanced polymers and polyurethanes (PU) in aerospace and automotive applications. Belgium-based Solvay and Germany-based Bayer MaterialScience (BMS) - sponsors and material suppliers of the ultra-lightweight solar-powered plane, Solar Impulse - are optimistic about making strides in these two key markets. Advanced specialty polymers are on the cusp of breaking through in the aerospace sector, said the CEO of Solvay.

"Aerospace is a key target market for us, and we are just starting to see the development of new specialty polymer applications," said Solvay CEO Jean-Pierre Clamadieu.

Clamadieu spoke to ICIS on 12 July at an event featuring the Solar Impulse at JFK Airport in New York after its journey across the US from San Francisco, California, to New York City in six legs. Solvay produced a number of components for the Solar Impulse, including the solar cell film encapsulants, and is one of its lead sponsors. "We are optimistic about new products still to be brought to market in aerospace and automotive, so we see our specialty polymers business as a jewel," he added.

 

 From lightweight foams to electric car bodies, the time for advanced uses has come

Copyright: CorbisImages

Solvay's specialty polymers include fluorinated polymers as well as certain polyamides.

Lightweight specialty polymers will have applications inside the cabin of commercial aircraft, such as in overhead luggage compartments, rather than structural components, Clamadieu said. "We are working on foam applications of some of our polymers for different types of parts that can be used on the inside of the cabin," Clamadieu said. In the automotive sector, there is a greater challenge in the penetration of specialty polymers because of costs and the use of metal in high volumes, he noted.

"But for electric vehicles it is a different concept that could open up opportunities for specialty polymers," Clamadieu said.

For automotive and potentially aerospace applications, BMS is developing elastic compounds such as PU-carbon-fibre and PU-glass-fibre composites, said CEO Patrick Thomas, who also spoke to ICIS at the Solar Impulse event in New York.

These can be used as to make automobile crash bars, aerospace components, as well as longer lasting blades for windmills, he noted.

BMS is also developing elastic polycarbonate (PC) and glass-fibre composites, which can be thermoformed into car bodies and aerospace components, he added.

"Right now PU is primarily used in seating systems [in airplanes and autos]. Only recently have they been considered for advanced uses," said Thomas. BMS provided PU components for the cockpit, wing tips and engine casings, as well as PC for the window. "This is a great way to showcase our technology and how we work to solve technical problems," said Thomas. "Unlike a concept car, the Solar Impulse actually had to work. It was about setting targets, collaborating and delivering."

MDI, TDI OUTLOOK
For PU precursors globally, methyl di-p-phenylene isocyanate (MDI) demand is growing at 7-8% annually while toluene di-isocyanate (TDI) demand is growing at 4-5%, said Thomas.

In the US housing sector, BMS is seeing stronger growth for MDI-based resins as they replace formaldehyde resins in wood composites because of new environmental regulations, he noted. Another PU growth opportunity is in more energy-efficient refrigerators. "One of the PU foams used in the Solar Impulse is going to be used in 3-star rated [highest energy-efficiency rating] refrigerators in Europe, which will also have thinner walls," said Thomas.

"Trials are happening now and we should see this in the market in 2014," he added.

However, global PU demand growth is primarily being driven by product substitution.

"PU growth is typically driven by substituting for other materials - from metal to formaldehyde resins to polyester and epoxy resins," said Thomas. "It is a function of basic economic growth and substitution."

TIGHTENING MARKETS
Thomas expects global markets for MDI, TDI as well as PC to tighten through 2015. Continued, though slower, economic growth in China and recovery in US markets will help to boost demand and tighten supply, despite poor conditions in Europe and new projects coming on stream, he said.

"Clearly European markets have been subdued whilst the American market has been picking up. The Chinese market is slightly slower than in the past but is still growing with the magnitude of that growth still relatively high compared to the rest of the world," Thomas said in an interview in July prior to the Solar Impulse event.

"When I look out to 2015, I see tightening on all our major product streams - PC, MDI and TDI - over that time period. Although there is new capacity coming on stream, demand is growing faster," he added.

Thomas said that when examining the supply/demand balance, you have to apply a discount factor to announced new projects because typically only around 70% of announced capacity comes on stream.

"We found that by looking at the last decade. We've got a reasonably good fix on our main product streams," he said.

Asked about the chance of a delay to startup of the company's new 300,000 tonne/year world-scale TDI facility in Dormagen, Germany, because of poor demand in Europe, Thomas said: "We always bring projects online with the market - that's always been our strategy. You get a licence, start building, prove it works and then choose to ramp it up with the market."

The TDI plant at Dormagen is on track for start-up in the second half of 2014, the company said in an update on 19 July.

BMS said that construction of the plant's basic structure was complete. The company marked the event in a traditional "topping out" ceremony, known as Richtfest.

CHINA OUTLOOK
At the Solar Impulse event, the BMS CEO also opined on China, where he expects infrastructure spending to pick up going forward.

"It feels like slower than headline growth as government efforts to avoid a property bubble are slowing construction and infrastructure projects," said Thomas. "However, once they get a handle on things, we'll start to see infrastructure projects begin to liven up. Housing construction will take longer to recover as there are many unoccupied apartment buildings." The auto sector in China continues to show strength, especially with growing demand for foreign branded cars, said Thomas.

"The Chinese seem to want to buy Western vehicles. That helps us as we are major suppliers to them but we also supply Chinese automakers," he noted.

Demand for furniture and bedding is also driving growth for PUs. "The furniture industry in China is doing well, driving demand for TDI," said Thomas. Demand for mattresses and bedding account for around 80% of TDI demand globally, he noted.

US SHALE GAS IMPACT
And in the US, the shale gas revolution is putting Europe's polymer industry under enormous pressure, said Thomas.

Access to cheap feedstocks is allowing the US chemical industry to export polymers with around half the production cost of naphtha-reliant facilities in Europe, the CEO said.

"Clearly in America shale gas has lowered energy prices enormously. Shale gas is effectively being exported as polyethylene [PE] from America to Europe at about half the cost of manufacturing in Europe so it's a very significant impact on the polymer industry."

BMS has also been impacted significantly because it relies on aromatics, which have become structurally short on the back of the switch to ethane feedstock for ethylene production in the US. "For our part of the industry that relies on aromatics, there is a minimal effect in terms of benefit, but there is a slightly negative effect because most American crackers are operating on gas feed rather than naphtha, so there is less availability of aromatics," said Thomas.

"And with a couple of plants shutting down for turnarounds in Europe, we've seen the benzene market tighten and fly up in price to typically $600/tonne [€463/tonne] above naphtha whereas a normal level would be around $400[/tonne]," he added. "That's been quite a supply shock in terms of raw materials. In our first-quarter results there was an impact of just over €100m just on the benzene fly up."


BMS plans to build CO2-to-polymers plant by 2015
Bayer MaterialScience (BMS) is planning the construction of a commercial-scale plant using novel technology to convert carbon dioxide (CO2) into polyether polyols.

The project, with a capacity of just under 10,000 tonnes/year, will use catalyst technology already proven at a pilot plant in Leverkusen, Germany, to produce polyols, which can be used as a feedstock for polyurethane (PU) production.

"We call this the 'Dream Production' process, which started when we decided to try and find some catalysts to allow us to put CO2 into polymer chains. We've successfully now proved with a power station chimney that we can take CO2 at a pilot scale and make it into a polyether polyol that can be used in polyurethanes," said Thomas.

He added: "What we intend to do next is build a commercial-scale unit [with] a capacity of somewhere under 10,000 tonnes/year [that] will be on line in 2015 to serve the market with realistic quantities for commercial use."

Thomas said the company is currently investigating whether to keep the technology in-house, or license it: "We're testing people's views on that right as we speak."


Author: Joseph Chang and Will Beacham



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