Price and market trends: SABIC sees eastward shift in demand for specialty plastics

25 October 2013 10:01  [Source: ICB]

Saudi Arabia-based petrochemicals giant SABIC is seeing a gradual shift eastwards in demand for products produced by the specialty plastics industry.

Keith Smith, executive vice president of SABIC Innovative Plastics, told ICIS that there has been a gradual rise in demand from the region, as orders from increasingly affluent emerging market producers adds to existing demand from manufacturers looking to export to the west.

“There continues to be a steady move eastward in the demand and two things drive that: the increased local demand, [and] although the tide has slowed a little bit, there continues to be a growth of manufacturing in the east to supply the west,” said Smith.

US PROVES RESILIENT
While key European end markets remain sluggish despite the gradual thawing of the region’s economy, the US has proven more resilient, particularly the automotive sector, Smith said.

“Europe’s seen tough times, but in North America we’ve seen reasonable growth – especially strengthened by [the] automotive [sector]. Asia continues to grow, but not at the growth rates we would desire or had planned for,” he said.

SABIC’s Innovative Plastics division, which produces thermoplastics, specialty compounds, film and sheet products, additives, and intermediates and coatings, has been seeking to catalyse growth by developing applications for specialty products to drive demand, and actively creating substitute products to replace existing materials.

MODERATE GROWTH IN 2013
“We’ve seen global growth, but that’s mainly from our application development effort that’s creating downstream demand. We’re always working on material substitution so that’s a positive factor that’s always going into the growth equation, and the economy can add to it,” Smith said. “We’ve seen moderate growth in 2013, but less than what we’d hoped for overall. I think that’s what the industry has seen in general… Even the US building and construction sector is starting to see some recovery, which has been a real weak point,” he added.

Key end markets for the business include the automotive, electrical, lighting, healthcare, transportation and consumer electronics sectors.

AUTO OUTLOOK
Although automotive sales in Europe have reached their lowest level since industry body the European Automobile Manufacturers’ Association (ACEA) began to compile figures in 1990, fuel efficiency legislation has increased the need for manufacturers to utilise specialty materials in car production, and the global market has performed well overall, according to Smith.

“Globally, automotive has been strong, as has consumer electronics. Those are two of our biggest markets, and they’ve done well. The automotive [industries] in Asia and North America have done well, but we’ve seen vehicle penetration [in terms of] kilograms per car grow in all parts of the world, so that’s been a good thing,” he said.

MARKET DETERIORATION
However, capacity overhang for some commodity materials has weighed on performance, Smith added in a telephone interview from the K2013 plastics fair in Dusseldorf, Germany.

He said: “As you go into some of the less differentiated part of the portfolio, we see some aspects where there is overcapacity… and clearly you’re going to see market deterioration in those areas.

“[The] largest one... [is] the undifferentiated portion of the polycarbonates industry, where capacity growth has outstripped the market growth,” he added.


By: Tom Brown
+44 208 652 3214



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