- Email: [email protected]
Plasticizer market expected to shift
F O C U S
O N
Editorial (continued from page 1) struggle. A recent report from Trinity College, Dublin, Ireland has found that the high cost of enforcing legal protection of patented inventions is seriously hampering individual inventors and entrepreneurial small companies in all sectors of industry. It would be a useful exercise for a group of people with long experience of the vinyl industry to identify the most appropriate (but achievable) strategic targets for research in PVC over the next five years, and to bring them to the attention of the world’s brightest technical academics, along with some cash. But are academics sufficiently interested in PVC? If not, there must be a failure of communication somewhere. You can always find academics ready to interest themselves in industries that they think have a bright future. If they don’t do much research into PVC, the industry needs to persuade them that vinyl is for today and tomorrow, not just yesterday. Geoff Pritchard
PRICES AND DEMAND (continued from page 1)
Plasticizer market expected to shift Eastman Chemical Co is to increase the off-list price of a range of plasticizers by 5 cts in the Americas. The products include Eastman’s DMP, DEP, DBP, DOP (otherwise known as DEHP), 168, 168-CA, 425, DUP, DOA, regular and Kosher, TOTM, and TOTM-CA. The company says an increase is necessary in order to reinvest in facilities and services that help Eastman maintain continuous and reliable supply. Overall supplydemand has been out of balance but is now returning to a more balanced state. The plasticizer market is expected to grow slowly. Flexible PVC is struggling in the wake of increased scrutiny of phthalate-based plasticizers, especially for applications such as medical tubing, toys and packaging. Medical applications account for 10% of all flexible PVC demand. DEHP in Europe must now carry a skull and crossbones symbol. Global demand for plasticizers was over 4.6 M tonnes in 2000. The market is expected to grow at 2.8%/y until 2001. In 1998, the US accounted for 17%, W Europe 25%, Japan 11%,
2
P O LY V I N Y L C H L O R I D E
the rest of Asia 34%. PVC, PVB, and polyvinyl acetate account for around 85% of demand in N America, 88% of demand in Europe, and 80-90% elsewhere. Leading producers in N America are ExxonMobil (295,000 t/y capacity), Eastman (205,000 t/y) Sterling (127,000 t/y) Sunoco (95,000 t/y) and Solutia (75,000 t/y). Chemical Market Reporter, 3 Jun 2002 (Website: http://www.chemicalmarketreporter.com)
Global outlook: PVC to improve more quickly than other polymers Polyvinyl operating rates and margins will be affected more quickly by improving demand and limited capacity than most other polymers. Over the past 3 months global PVC markets have tightened significantly due to increasing demand and production cutbacks. During 2001 global PVC demand fell by 0-1% compared to 6-7%/y growth previously. Operating rates have fallen to all-time lows of 80-85%. Demand is recovering and is expected to reach 6%/y growth through 2006. Since Dec 2001 global prices have risen by 30%, but are due to fall during 2H 2002 as demand slows down. Average prices are expected to be up by 1 cts/lb to 26-29 cts/lb in the US, and by $28/tonne to $550-570/tonne in Western Europe. Fastest demand growth of 18%/y is expected in India with 7.5%/y predicted for China. Developing regions are expected to achieve growth rates of 6.5-7.2%/y through 2005. Slower growth is predicted for developed areas. Weakest demand in Europe will be around 1%/y in Germany over the next 2 years. Over the past 6 years the construction industry in Germany has reported a 5.7%/y decline in demand for PVC. Vinnolit aims to focus on Eastern Europe where demand is expected to grow by 3-4%/y compared to stagnant growth in Western Europe. Since 1990 the number of PVC producers in North America, Europe and Japan has fallen from 54 to 38. Global capacity has risen by 59% over the same period to 28.4 M tonnes in 2001 and demand has improved by 43% to 23.7 M tonnes. Margins were damaged in the US during 2001 by new capacity and the rising cost of feedstock. Chemical Week, 15 May 2002, 164 (20), 35
PVC turns around in USA The PVC market is recovering after a bad year. Because PVC is a leading indicator for the entire chemical industry, this could be favourable news. N American PVC operating rates rates were only 74% in 4Q, but they are now 91%. Around 7% of the gain is a result of Borden closing down three plants earlier in 2002, but the rest is due to higher sales. Borden recently sold two of its three plants and shut down the third in Geismar, LA, earlier in 2002. Some doubt that this unit will ever come back onstream. The company may cease to exist soon. It has been in bankruptcy proceedings since Apr 2001. PVC producers are now trying to increase prices by around 50% because of rising costs for chlorine and ethylene. CMAI expects demand in 2002 to be up 8-9% on 2001. But there are some who believe that the surge in demand is due to PVC pipe producers building reserve stocks, rather than to a true economic recovery. Chemical and Engineering News, 20 May 2002, 80 (20), 20
COMPANY NEWS Concerns about market domination by Reliance in India Concerns about market domination have increased in India after the acquisition of a 26% stake in Indian Petrochemicals Corp Ltd (IPCL) by Reliance, which has also gained management control. Strong unions among the staff of 14,000 will make it difficult for Reliance to meet its costcutting objectives. The Reliance acquisition is expected to lead to reduced competition, particularly in the polymers and fibres sectors. This situation will not improve unless the 30% import tariffs are reduced with immediate effect. Reliance has pointed out that the combined capacities after the acquisition amount to only 3% of global capacities. Following the deal, Reliance will hold 53.25% of the Indian market for polyethylene, compared with its previous level of 19.81%. Capacity will rise from
JULY 2002
O N
Editorial (continued from page 1) struggle. A recent report from Trinity College, Dublin, Ireland has found that the high cost of enforcing legal protection of patented inventions is seriously hampering individual inventors and entrepreneurial small companies in all sectors of industry. It would be a useful exercise for a group of people with long experience of the vinyl industry to identify the most appropriate (but achievable) strategic targets for research in PVC over the next five years, and to bring them to the attention of the world’s brightest technical academics, along with some cash. But are academics sufficiently interested in PVC? If not, there must be a failure of communication somewhere. You can always find academics ready to interest themselves in industries that they think have a bright future. If they don’t do much research into PVC, the industry needs to persuade them that vinyl is for today and tomorrow, not just yesterday. Geoff Pritchard
PRICES AND DEMAND (continued from page 1)
Plasticizer market expected to shift Eastman Chemical Co is to increase the off-list price of a range of plasticizers by 5 cts in the Americas. The products include Eastman’s DMP, DEP, DBP, DOP (otherwise known as DEHP), 168, 168-CA, 425, DUP, DOA, regular and Kosher, TOTM, and TOTM-CA. The company says an increase is necessary in order to reinvest in facilities and services that help Eastman maintain continuous and reliable supply. Overall supplydemand has been out of balance but is now returning to a more balanced state. The plasticizer market is expected to grow slowly. Flexible PVC is struggling in the wake of increased scrutiny of phthalate-based plasticizers, especially for applications such as medical tubing, toys and packaging. Medical applications account for 10% of all flexible PVC demand. DEHP in Europe must now carry a skull and crossbones symbol. Global demand for plasticizers was over 4.6 M tonnes in 2000. The market is expected to grow at 2.8%/y until 2001. In 1998, the US accounted for 17%, W Europe 25%, Japan 11%,
2
P O LY V I N Y L C H L O R I D E
the rest of Asia 34%. PVC, PVB, and polyvinyl acetate account for around 85% of demand in N America, 88% of demand in Europe, and 80-90% elsewhere. Leading producers in N America are ExxonMobil (295,000 t/y capacity), Eastman (205,000 t/y) Sterling (127,000 t/y) Sunoco (95,000 t/y) and Solutia (75,000 t/y). Chemical Market Reporter, 3 Jun 2002 (Website: http://www.chemicalmarketreporter.com)
Global outlook: PVC to improve more quickly than other polymers Polyvinyl operating rates and margins will be affected more quickly by improving demand and limited capacity than most other polymers. Over the past 3 months global PVC markets have tightened significantly due to increasing demand and production cutbacks. During 2001 global PVC demand fell by 0-1% compared to 6-7%/y growth previously. Operating rates have fallen to all-time lows of 80-85%. Demand is recovering and is expected to reach 6%/y growth through 2006. Since Dec 2001 global prices have risen by 30%, but are due to fall during 2H 2002 as demand slows down. Average prices are expected to be up by 1 cts/lb to 26-29 cts/lb in the US, and by $28/tonne to $550-570/tonne in Western Europe. Fastest demand growth of 18%/y is expected in India with 7.5%/y predicted for China. Developing regions are expected to achieve growth rates of 6.5-7.2%/y through 2005. Slower growth is predicted for developed areas. Weakest demand in Europe will be around 1%/y in Germany over the next 2 years. Over the past 6 years the construction industry in Germany has reported a 5.7%/y decline in demand for PVC. Vinnolit aims to focus on Eastern Europe where demand is expected to grow by 3-4%/y compared to stagnant growth in Western Europe. Since 1990 the number of PVC producers in North America, Europe and Japan has fallen from 54 to 38. Global capacity has risen by 59% over the same period to 28.4 M tonnes in 2001 and demand has improved by 43% to 23.7 M tonnes. Margins were damaged in the US during 2001 by new capacity and the rising cost of feedstock. Chemical Week, 15 May 2002, 164 (20), 35
PVC turns around in USA The PVC market is recovering after a bad year. Because PVC is a leading indicator for the entire chemical industry, this could be favourable news. N American PVC operating rates rates were only 74% in 4Q, but they are now 91%. Around 7% of the gain is a result of Borden closing down three plants earlier in 2002, but the rest is due to higher sales. Borden recently sold two of its three plants and shut down the third in Geismar, LA, earlier in 2002. Some doubt that this unit will ever come back onstream. The company may cease to exist soon. It has been in bankruptcy proceedings since Apr 2001. PVC producers are now trying to increase prices by around 50% because of rising costs for chlorine and ethylene. CMAI expects demand in 2002 to be up 8-9% on 2001. But there are some who believe that the surge in demand is due to PVC pipe producers building reserve stocks, rather than to a true economic recovery. Chemical and Engineering News, 20 May 2002, 80 (20), 20
COMPANY NEWS Concerns about market domination by Reliance in India Concerns about market domination have increased in India after the acquisition of a 26% stake in Indian Petrochemicals Corp Ltd (IPCL) by Reliance, which has also gained management control. Strong unions among the staff of 14,000 will make it difficult for Reliance to meet its costcutting objectives. The Reliance acquisition is expected to lead to reduced competition, particularly in the polymers and fibres sectors. This situation will not improve unless the 30% import tariffs are reduced with immediate effect. Reliance has pointed out that the combined capacities after the acquisition amount to only 3% of global capacities. Following the deal, Reliance will hold 53.25% of the Indian market for polyethylene, compared with its previous level of 19.81%. Capacity will rise from
JULY 2002