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September 09, 2008 07:00 AM

Global demand for TPE is moving eastward

Chris Smith
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    Global demand for TPE's will grow at an annual rate of 6.3% through to 2011, predicts US-based market research company Freedonia (www.freedonia.com), taking volume demand from just less than 3.1m tonnes to 3.7m tonnes.

    According to Freedonia, China will see its share of the world market expand from less than 30 to 33% by 2011. Styrenic products will continue to dominate the market, it says, with a share of 45% in volume terms by 2011. Thermoplastic olefins (TPOs) will take a 19% share of the market, TPUs14% and TPVs 11%.

    China's increasing influence in the TPE sector is identified as a critical development by Bob Eller and Robert Young at US consultancy group Robert Eller Associates (www.robertellerassoc.com), which has carried out detailed analysis of the European, US and Chinese markets.

    Eller says that Chinese demand for SEBS compounds has been growing at around 14% a year, although the global economic situation means that it is likely to slow to little more than 10% in 2009. Demand for olefinic-TPVs (o-TPVs) has been expanding at rates of around 25% a year.

    However, the high growth in and end market shift to China has taken at least a one percentage point off of growth in the more established western TPE markets, he estimates, with the current economic conditions taking, perhaps, a further percentage point away.

    There are, however, some bright spots in the emerging European markets. While Eller estimates western European o-TPV growth to have slowed to 5-6%, growth for the same product family in eastern Europe is running at around 16%.

    The TPE marketplace is tough but producers are, in general terms, facing the same challenges as other raw material manufacturers, says Eller. These include raw material price rises, end market slowdowns, shift of end market production to lower cost regions, and a difficulty in passing their full manufacturing cost increases on to customers.

    Eller believes that overall growth rate figures for the TPEs market do not provide the observer with meaningful insight as they hide inter-material shifts and the development of specific new market opportunities.

    “The growth varies substantially within TPEs and between TPE families,” says Eller. “The overall growth will be strongly affected by the timing of penetration of some very high volume new markets.”

    SEBS, for example, is penetrating traditional o-TPV sectors. In part this can be accounted for by the “value cascade”, where over-engineered higher priced TPEs are replaced by less costly alternatives with performance characteristics more closely matched to specific applications.

    Price is also a factor in SEBS growth. New markets for lower performing and more competitively priced TPEs have developed in China. And tightening economic conditions in western markets are likely to drive this cost-down trend further.

    Meanwhile, SEBS compounders may see competition from OBC (oriented block copolymer) blends. GLS and Teknor Apex are both using Dow's OBC materials and are being pitched both at PVC and SEBS substituition.

    In terms of new application areas, Eller considers large part, two-shot combination parts, such as automotive instrument panels and door skins, to be a key growth area. “This penetration has already started and we believe this will be a high growth area in which SEBS, o-TPVs and ionomer-based TPVs will be the contenders,” he says.

    Recyclability will also return to the fore. Eller says that this aspect of TPEs has long been promoted as a key benefit but has not really become a market driver. This will change, he predicts, and particularly in the automotive industry.

    “Recycling is going to become more important. The value of that scrap is going up and up and that's important for parts you can pull off a car quite easily,” he says.

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