Market's move away from phthalate plasticizers hurts US Ferro unit

24 October 2013 22:50  [Source: ICIS news]

HOUSTON (ICIS)--The move by US and European markets away from phthalate plasticizers will continue to drag down Ferro’s polymer additives business until it begins producing dibenzoates in late 2014, executives at the US-based specialty chemicals firm said on Thursday.

Ferro announced in June that its Antwerp site in Belgium will begin producing 28,000 tonnes/year of dibenzoates. These are non-phthalate, fast-fusing plasticizers that have gained favour as an eco-friendly polymer additive.

Ferro’s benzyl phthalate plasticizer business took a hit this year, and it expects another one next year, CEO Peter Thomas said during a conference call on the company’s Q3 earnings.

Deselection began when the European Commission added butyl benzyl phthalate to its Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation.

“Over the past three years, we have been steadily seeing the deselection take place at roughly somewhere between $6m-10m/year,” Thomas said.

Starting late last year, however, the deselection process began accelerating in the US as the flooring industry shifted away from using phthalate-containing materials because of Proposition 65 in California, said Jeffrey Rutherford, Ferro’s chief financial officer.

Proposition 65 requires the state to publish a list of chemicals known to cause cancer or birth defects. Recently, there has been legal challenge regarding the labelling requirement for benzyl phthalate.

“There isn't empirical evidence that our products actually are a threat to health or the environment,” Thomas said. “Well, we live in a world of perception, and it was cheaper for the flooring folks to go ahead and reformulate away, and [deselection in the US] something that we hadn't expected …”

Ferro believes that flooring deselecting will be completed in 2015.

However, it will continue to negatively impact sales in the Q4 2013 and through 2014 until dibenzoates production at Ferro’s Antwerp site is underway in late 2014, Thomas said.

In the US, Ferro has been working on an alternative technology, reformulating its platinum series of plasticizers and making the products more cost-effective, he added.

“That particular product family is gaining momentum,” Thomas said. “Coupled with the dibenzoates from Europe and some other products that we're developing in North America to help offset that shortfall in volume, [it] will be realised in a way that by 2015, it will be like we didn't have benzyl phthalates down the river.”

($1 = €0.73)

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By: Tracy Dang
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