0 HTTP/1.1 200 OK Cache-control: no-cache="set-cookie" Content-Type: text/html; charset=UTF-8 Date: Sun, 15 Sep 2019 08:27:03 GMT Link: ; rel="https://api.w.org/" Link: ; rel=shortlink Referrer-Policy: no-referrer-when-downgrade Server: nginx Set-Cookie: AWSELB=C13DA3971E62E4440757B24F33013C61402A8D54F1B83C6114DEC94B4275744A153604DA9B62580A2FFB5297860170EF58C9683F2F2D007496EBB98C5149C8AFE707FD1A87;PATH=/;MAX-AGE=30 X-Content-Type-Options: nosniff X-Frame-Options: SAMEORIGIN X-XSS-Protection: 1; mode=block transfer-encoding: chunked Connection: keep-alive 3682 Autos Material Science: 180 Degree Change For Petchems – Asian Chemical Connections

China-Autos2By John Richardson

HERE is an example of how the links between the petrochemicals and polymers business and the autos industry have long worked:

  •   In the 1980s, propylene was a very low value co-product of naphtha and other liquids cracking. You always make around half a tonne of propylene for every one tonne of ethylene you make – you pretty much have no choice. And so a lot of work went into finding better ways of making use of all of this cheap propylene.
  • Polypropylene (PP) was one way of making great use of propylene.  Many R&D departments pushed the envelope on changing the properties of PP to make it of greater value in end-use applications. They then went to the autos companies and persuaded vehicle manufacturers to replace steel, aluminium and other polymers with PP for cost saving and performance reasons. PP is, for example, both light weight because of its density and also strong. So it is a safe material to use in front and rear bumpers, whilst boosting fuel efficiency. What a fantastic success story.

The same has applied more recently to polycarbonate (PC), which right now is very cheap to produce because China has basically destroyed the global phenol market. A cheap feedstock is thus once again an opportunity. PC makers have a chance to replace more glass, steel and competing polymers in autos by investing in PC application development.

Replacing glass in autos for weight reasons is an old story, but one that still has plenty of mileage left on the clock. But as electric battery-driven autos become much more cost effective and efficient, leading surely to a big jump in sales, here is another application for PC: Safety housings for the batteries, as PC is a good material to prevent injury in the event of a battery fire.

But the relationship between the petrochemicals and polymers industries and their auto-manufacturing customers is undergoing a 180 degree turnaround. This is the result of breakthroughs in material science.

Instead of our industry pushing polymers on to the auto makers, we will switch to a pull factor: The auto makers coming to us and saying, “These are the materials we want”. And they may not come to the petrochemicals business at all if the optimum materials required end up being super lightweight and cheap composites of say of steel and inorganic materials – or even recycled and bio-based materials.

Supercomputing is enabling new ventures, such as the California-based Materials Project, to compile the properties of all known compounds and predicted compounds. In other words, if a compound hasn’t even been made yet, a supercomputer can tell you whether it makes sense to make the compound by analysing loads, stresses, fluid dynamics, aerodynamics and thermal conditions etc. In the virtual world, you can make your new car and drive it around the streets to see how it performs, long before you even think about going into production.

What is worrying about the Materials Project is that its entire focus is on inorganic compounds. So far it has simulated 60,000 materials and in five years’ time says it will have reached 100,000.

Further breakthroughs in 3D printing technology will enable much more flexibility in using either single new materials or composites in auto manufacturing that could replace say PP and PC.

Researchers in Tennessee have developed an automated 3D printing technology called Big Area Additive Manufacturing. This enabled another group of US researchers, along with a machine-tool company, to take just six weeks to design, print and assemble a Shelby Cobra, a classic 1960s sports car.

Using 3D printing on site in a car factory lends itself very easily to switching between different materials to achieve performance gains. Switching between materials is much harder on a conventional  outsourced injection-moulding line.

Why the desire for this 180 turnaround? Because in a deflationary world, the global autos market has essentially split into two distinct and very different value propositions:

  1. Making and selling millions of very cheap, but very reliable, longer-lasting and very fuel-efficient autos for all those struggling on reduced incomes in the West because of the end of the Babyboomer economic Supercycle. The same models will also sell extremely well in emerging markets now that the other big driver of the Supercycle – China – has changed economic direction. The auto makers will thus have to very push the manufacturing envelope to keep their costs to an absolute minimum. If they fail to do this, their very survival is in question.
  2. Making top range cars in much smaller volume, of course, but with higher margins, for the super-rich. These are the people who will be more or less immune from the New Normal. But even if it is about “wants” rather than “essential needs” for the super-rich, what they want is still undergoing important changes. For environmental reasons they will want more gasoline-efficient or diesel-efficient cars, or will instead opt for the new generation of electric battery-driven autos.  They will also take a close look at what their car is made of. If it is made from “dirty old petrochemicals” that will not be good. But what if, by using all that clever supercomputer modelling, an autos manufacturer can replace crude oil-based polymers with recycled or even bio-based materials?

What will happen is that the “middle market” for autos will shrink. No longer will auto makers be able to get away with making money out of cars that are only reasonably cheap to make, reasonably well designed, reasonably cost effective and reasonably fuel-efficient.  “Reasonably” or “average” will no longer be good enough. Only “outstanding” will work.

How does the petrochemicals industry respond to this challenge? See our new 5 Critical Questions study for guidance on what to do next.

PREVIOUS POST

Deflation Threatens Asia's Ethylene-Polyethylene Link

07/12/2015

By John Richardson AS you can see from the above chart, ever since April 1997, w...

Learn more
NEXT POST

Dow And DuPont: How A Merger Could Work

11/12/2015

By John Richardson DOW Chemical and DuPont are companies with tremendous histori...

Learn more
More posts
President Trump can only cause major economic damage by beating China, unless he has a time machine
12/09/2019

The views in this blog, are, as always, my own personal views and don’t reflect the views of I...

Read
Unsustainable boom in China auto market ends as sales of new vehicles move permanently lower
08/09/2019

By John Richardson THERE IS a big temptation when making forecasts of becoming too excited about the...

Read
Global PP demand could be 81.5m tonnes less than forecast in 2019-2028 as China Debt Supercycle ends
05/09/2019

By John Richardson SOME PEOPLE argue that despite the rapid rise in Chinese consumer debt over the l...

Read
China economic stimulus and PP: How global demand could have been 71m tonnes smaller
04/09/2019

By John Richardson CHINA came to the rescue of the global economy in 2009. This wasn’t for altruis...

Read
Hong Kong an example of rising political risk and the end of easy growth
02/09/2019

This blog expresses my opinions and not those of ICIS By John Ricuardson THE UNREST in Hong Kong wor...

Read
China imposes trade-war tariffs in US LDPE and raises tariffs on HDPE and LLDPE
27/08/2019

By John Richardson DON’T SAY I didn’t tell you. As I predicted, China has levied trade-war tarif...

Read
President Trump’s “better off without China” tweet not supported by the data
24/08/2019

The opinions in this blog post are, as always, my own and do not reflect the views of ICIS   By...

Read
How sustainability will upend the petrochemicals cost curve, creating new winners and losers
23/08/2019

By John Richardson THE FUTURE I described on Wednesday, of declining petrochemicals and polymers dem...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more
0