by Liz White, editor
If polyurethanes are a business where megatrends are important, then the influence of the Chinese market on the sector could probably be considered a single megatrend in its own right.
China has rebounded speedily from recession, aided by strong government incentives, and growth in polyurethanes is high.
China’s government is also strongly committed to developing a low carbon economy, which experts feel will stimulate growth in the use of PU insulation in construction.
Another recent trend commentators at the recent PU China 2010 event observed is a move for Chinese manufacturers to focus more on supplying the domestic market, and away from exports.
One local urethanes expert, Zhang Jie, of the China Polyurethane Industry Association noted that this focus on the domestic market resulted from the effect of the global financial crisis on China’s export-oriented industries, which meant production of toys, textiles, synthetic leather and shoes, with high PU content, shrunk.
Zhang also made the observation that China needs to become “stronger” in PU — not just bigger, in a presentation he wrote for the Korean Polyurethane Society’s International Forum, as reported on p 11 of this issue.
At present, Zhang feels, the industry is fragmented, with China’s current 5 million tonnes of PU(2009) used by thousands of small, non-consolidated processors, he said (see box p19 for CPUIA data on China’s PU sector).
Suppliers UTI spoke to at the event were optimistic that current high growth in the polyurethanes business in the region will continue.
“We are seeing excellent demand in Asia Pacific,” for polyurethanes, said Peter Vanacker, head of the global polyurethanes business at Bayer MaterialScience. The group is seeing very strong double-digit growth, close to 20 percent, added Vanacker’s colleague Azita Owlia, senior vice president and head of PU marketing for Bayer MaterialScience in Asia Pacific.
In China, recovery was rapid and strong, “Vshaped,” said Owlia, despite the fact that it was the first to see demand slump, in Q4 2008.
Other suppliers UTI spoke to in China had similar views; Jiansheng Ding, chairman of local polyurethane raw material supplier Yantai Wanhua Polyurethanes Co. Ltd, reinforced this picture of a sharp decrease and rapid rebound: “By the end of February/March, certainly, China had recovered, much more quickly than the rest of the world, largely as a result of the government’s stimulus programmes,” Ding said.
Reinforcing BMS’ view of a resilient Chinese economy, Wong Lee Meng, general manager for Cannon Far East Pte Ltd in Singapore said the machinery supplier has seen strong growth in 2010; “Far more than in the previous year, with China booming in all sectors, automotive, refrigeration.” The Cannon executive attributed this boom to the “Chinese government’s stimulus plans after the financial meltdown.” Such plans involved “very smart measures” for tax rebates, allowing percentage point gains in profit margins, as well as incentives for automotive and appliance purchases, he said.
For example the government gave farmers incentives to switch from old three-wheelers to new four-wheeled vehicles, Wong pointed out.
commercial director in Asia Pacific, similarly praised the government approach. “China has been a hero for the global economy in the last couple of years ... thanks to the government stimulus packages.” Looking at sales of cars, appliances and electronics, Ogawa said these have been increasing more than 20-30 percent ... I think that is why demand recovered much quicker than we expected in Asia... and that has helped our business as well,” the Dow executive added.
According to Yantai Wanhua’s Ding, “China is the recent growth driver,” of the global economy, and has now exceeded 2007’s output. Ding also sees the US as recovering, while Europe, with certain noticeable macroeconomic difficulties, also seems to be recovering from the downturn in terms of polyurethane, leaving Ding “reasonably upbeat” about prospects.
“With the growth rate here in China, every two years the [MDI - methylene diphenyl diisocyanate] sector needs to build a new plant,” the Yantai chairman added.
Yantai’s growth figures for polyurethane sales are similar to those of Bayer. The Chinese group’s MDI business saw growth of more than 20 percent for 2009 versus 2008 and for Q1 2010 versus Q1 2009, said Ding, noting that the comparison figures are being revised because Q1 2009 was a period of such unusually low demand.
Is the current high growth sustainable? Ding said “Yes,” assuming that, “the global economy does not have a double dip,” and that China’s macroeconomic situation remains the same.
Ding also noted that China’s government is really pushing a low-carbon economy very hard.
This makes him quite optimistic about expanding insulation use in future.
Looking specifically at PU demand, Melanie Maas-Brunner, senior vice president for BASF’s polyurethanes business in Asia Pacific, observed: “I would say we are right now for the MDI business ... globally of course, we are lagging behind,” and have not regained 2007’s levels.
But on the TDI (toluene diisocyanate) side, the BASF executive commented that, “Over the crisis, in China especially, I think there was a little slump; and TDI continued like it did before.”
Isocyanates supply tightening
This view of TDI’s uninterrupted growth is universal. And there is a general consensus, that as a consequence, TDI supply is tight at present while MDI supply is moving that way.
Looking at supply and demand in the PU sector, Vanacker said TDI (toluene diisocyanate) was short prior to the crisis, grew by about 2 percent in 2009, and is continuing to grow, with potential growth of 4 percent annually in the medium term.
And “MDI will continue to outperform this at 6 percent or a little higher annual growth,” he added.
An analysis of the last 20 years for MDI/TDI growth shows that “TDI has been in that corridor of 4-5 percent,” Vanacker commented.
And since there is little new TDI capacity coming through currently, supply will remain “balanced to tight,” — leaning towards tight rather than balanced, Vanacker noted.
With TDI, the facilities are generally much older than for MDI, and “we’ve seen in the past that suddenly there are reliability issues in the older plants,” which is why the tightness will be felt more strongly in TDI than in MDI, he said.
Nevertheless, in MDI, Vanacker said, “we already have a tightness, due to the very strong recovery at the beginning of this year, on a global basis.” And he said, “if you set continued growth in demand, against the additional capacities that are going to come on stream, then I believe we are going to have a balanced-to-tight situation at least until 2014.”
Variability in polyol demand
In polyol demand, Dow Polyurethanes sees “significant variability across the world depending on geography and the market segments,” said Guillermo Novo, Dow’s business vice president for polyurethanes.
In Asia, “most of the segments are growing very fast, in furniture and bedding, the appliance segment, construction,” he said. But “If you look at other parts of the world, construction is obviously being hit much harder in Europe than in the US,” while other areas have started to do better than in 2008, he commented.
So we’re seeing growth, with automotive coming back in certain areas, and Dow is “cautiously optimistic,” Novo said. “I think if we have just a few more quarters of stability, people will get confidence on the consumption side,” he added.
“Even in the US things have stabilised, the automotive industry has recovered, furniture and bedding is doing better. So I think there is going to be an amount of global stability,” the Dow polyurethanes chief added.
China’s wealth redistribution working?
Looking at China’s demand for TDI for flexible foam, Peter Huo, global marketing manager for Yantai, said that one of China’s biggest trends is urbanisation, with a lot of new housing being built.
Also, he said, “people like to buy a sofa ...
and I actually see people in China moving now towards soft beds.” For many years, the Yantai manager noted, “Chinese people stayed with hard wooden beds. But now they are asking for foam mattresses. If that trend continues, there will be a huge market,” Huo commented.
Huo discussed the concept of Five Chinas — five levels of the population ranging from the richest well-educated high-spending consumers, to the great bulk of the rural poor. “You are now in China 1 in Shenzhen,” he pointed out.
The Five Chinas have a population of more than the whole of Europe and US combined, Huo pointed out, commenting that he feels the poorer segments — China 4 and 5 – “are moving up quicker than I thought.” One reason for this is that China is now “much more focussed on domestic consumption. To do that you need a focus on basic social welfare so people can spend money,” he said. So the wealth created by the country has seen some secondary distribution which helps lift up the poorer segments of the community, Huo commented.
Cannon’s Wong also referred to new government healthcare programmes for the poorer segments of society and said other forms of social welfare are coming. While this undermines the Chinese tradition of saving hard for old age and sickness, it also allows the population to become more consumer-oriented, he concluded.
Simply in terms of per capita consumption there is ample room for growth: polyurethane consumption per capita in North America is close to 5 kg while Asia’s is at about 1.1 kg, said Ogawa of Dow.
And his colleague Novo pointed to one advantage Asia has. Since, in exports, it is using “a lot of state-of-the-art technology on furniture, on a lot of different appliances,” that same top end process/product technology is then also used for the local market, he said.
Novo added that Asia has a further technologies – that it is building new and has been building new... so it can go with the newer technologies. If you don’t have an asset base already there,” then it is much easier to use newer less environmentally damaging technologies, the Dow chief added.
From its many customer contacts — in appliance, automotive, construction, adhesives, sealants, flexible slabstock — Dow sees a lot of optimism, Ogawa said: “I ask everyone, and they always say, ‘We are confident’.” But there is some contradiction between a low-carbon economy and the huge growth happening in China. Discussing this, Novo said, “I think it’s the global story everywhere,” to try to make these two compatible. He commented that Dow’s state-of-the-art Thai HPPO facility (see box p 20) exemplifies new process technology that is cleaner and leaner.
Ogawa agreed that how to square high growth with less environmental impact is “a big question for everybody.” Companies feel a low carbon commitment implies low GDP. So this is an opportunity to see how such contradictions can be solved, he indicated.
Looking toward the future, Bayer’s Owlia said China’s economy has continued to grow, aided by the stimulus packages and the focus on rural development. But of course, she pointed out, those incentives “are not there forever.” While BMS is confident that some of the development started under these programmes will continue, Owlia said, “Whether the high growth rates will continue is not clear.” And she said, “You have to look at China separately to polyurethane – which has a lot of opportunities because there is significant potential for growth in markets where PU use is still low compared to developed countries.” And, she said, “if you take megatrends with food storage,” in China currently only 15 percent of agricultural products are protected by cold storage. This gives rise a significant amount of waste, perhaps 30-50 percent, and here PU has a significant potential because in developed countries cold storage is used for some 90 percent of the food grown.
Like other commentators, Owlia also feels the push for more rural development will promote demand for consumer goods such as fridges. And, like Yantai’s Huo, she sees urbanisation as bringing fresh opportunities, as people want to refrigerate food, and buy mattresses and furniture.
Here, Owlia noted that, for example in construction, which has seen huge growth in China, “the majority of the housing and industrial buildings are either not being insulated or not using PU.” This means, especially in the light of “the sustainability aims that China has set in place, [that] PU will have a very good position in terms of construction.” Wong also noted that a key growth strategy for the Chinese authorities lies in alternative ways to produce energy and to conserve its use.
Cannon is contributing here, producing RTM machinery to make wind-turbine parts using epoxy resin, where three machines have already been sold to Siemens, Wong said.
Domestic focus stronger
Ogawa made a point reinforced by other commentators. “In China, some of the furniture bedding companies, are now shifting to developing domestic consumption” rather than chasing exports.
His colleague Novo reinforced this view: “Even the big exporters say that they are developing the local market,” that’s where they see the business expanding in future.
Today many businesses, foam businesses as well, are 70 percent export, 30 percent local supply, added Ogawa. “Maybe in five years time it will be completely the opposite... I think that’s a consistent message from everywhere.” But automotive is one business that is definitely not exporting its products, Ogawa pointed out. The giant Chinese car-production sector is really focused on the domestic market.
Wong of Cannon commented that car production in China in 2009 was possibly 13-14 million, with a level of 15 million predicted for 2010.
Figures from UTI’s sister publication Automotive News China confirm this: China’s car/light vehicle production was 12 758 290 units in 2009, up 50 percent from the figure for 2008, according to Automotive Resources Asia, a J.D. Power unit. “For 2010, the figure is widely expected to increase by 20 percent from 2009, which means it could exceed 15 million units,” said Yiang Jian, editor of Automotive News China.
This year so far, production has been of 1.31, 0.94, 1.3 and 1.1 million for the first four months, Automotive News China shows.
Ogawa agreed that the automotive sector in China did not really suffer in the way car makers elsewhere have. Data on car sales shows “a very sharp increase since Q4 of 2009, he said, noting the “huge growth opportunity” still in the countryside in China ... where per capita car ownership is a fraction of that in the US.
Automotive is resilient
Most of the major global car companies are producing vehicles in China, and local brands such as “BYD and Chery are trying to take a good share of the market,” said Wong.
And Maas-Brunner of BASF agreed that the automotive sector in China proved very resilient: “I think it was the quickest industry in terms of the recovery,” she said, adding that it has continued to grow since September last year. “Now it’s a little bit more level,” she said.
Previously “the inventory was more or less empty all the time, now they are filling up the inventory.” She warned that, “We have to watch really carefully what is happening there, this is now the critical point in time,” adding that the question is “Can you really continue like this?” But for the time being “we are very positive,” the BASF representative said.
BASF sees the automotive business from two sides. “We see it from the Cellasto business, the jounce-bumper business, and also for the PU materials,” she noted.
In this context, “We have just done the groundbreaking for the Cellasto production plant we are building in Shanghai,” she said.
BASF is targeting the first production for the end of 2011 or early 2012, she added.
The growth of the Cellasto business gives BASF a good feel for the size of the business, Maas-Brunner said. “We are so busy right now bringing the materials in for the pre-marketing, this is really a logistic challenge to do this because they are really adding to tremendous growth,” she said. Chinese cars are using two or four of the parts, so “you can really calculate what is happening in the market,” Maas- Brunner noted.
Inflation and the future
Cannon’s Wong said wages In China are also rising and inflation may become a major issue, with prices already starting to rise, so that control of the value of the currency, the Renminbi, is an aspect the government is well aware of.
In China, the government is talking about taking measures to suppress growth to 8 percent to prevent runaway inflation. Along with the economic boom, the currency has been appreciating and is now under pressure, said Wong.
Yantai Wanhua chairman Ding said he supports the policy to curb inflation, commenting that it is “not very healthy to have such a high price for both financial assets and real estate assets.
Ding feels it is a good idea to “gradually remove some of the bubble.” And he further commented that, “every financial crisis starts from a small beginning and is the cumulative effect of lots of small events. So it is good timing, to releasing the pressure like this, before it really builds up.” Ogawa of Dow also said that China may have been growing too fast, at more than 10 percent GDP growth, and he thinks the authorities are now trying to “change the pace and control the overall growth to a reasonable level, to 8 percent GDP,” for more stability.
China: 30 % of PU globally
From 2001-2007, growth in the Chinese polyurethanes market averaged 25 percent, but the global crisis restricted growth in PU output in 2008 to 2 percent, said Zhang Jie of Chinese Polyurethane Industry Association.
In 2009, China consumed 1000 kt of MDI, 430 kt of TDI and 1350 kt PPG, he said.
Breakdown of China's PU use for 2007, kt Flexible foam 55 Rigid foam 814 Cellular PU 73 TPU 123 Paving material 132 Spandex 191 Resin for shoes 259 Resin for leathers 1141 Coating 800 Adhesive/sealant 59 Total 4547 China now accounts for some 30 percent of PU production globally, and is being transformed into a net exporter of PU materials, Zhang said.
By 2015, her output of MDI will exceed 1.6 million tonnes, making China the world’s largest MDI maker.
China’s government is investing $280 000 million in its rail system, and China’s demand for building materials, her output of spandex textiles and synthetic leather are the highest in the world, as is her automotive output, Zhang pointed out.
China also now makes 95 percent of the world’s cold storage containers, 60 percent of its shoes and 70 percent of its toys, he said.
Zhang listed total TDI capacity in China in 2008 as 390 kt, with output at 220 kt and consumption at 394 kt, the latter rising to 430 kt in 2009.
For MDI, he gave 2008 capacity in China as 1090 kt, with output at 503 kt and consumption at 814 kt, a figure which rose to 1000 kt in 2009, Zhang’s data indicated.
All these numbers have lead Zhang to conclude that the PU sector will also “maintain a fast and steady growth.” Zhang said that the sector’s revival began in mid 2009, as building/ infrastructure uses gained from China’s RMB 4000 billion funding in these areas.
In the rail sector, China plans to have a 100 000 km network by 2020, 16 000 km of which will be high-speed track (200 km/h), said Zhang.
For the 1318 km Beijing-Shanghai link, some 80 percent of the RMB 2000 million project lies in bridges and waterproofing, needing 20 kt of spray polyurea elastomer, 868 t of aliphatic PU coating and 6.7 kt of other PU protection.
In thermal insulation for building construction, the Chinese construction ministry puts PU’s share of the 320 million m2 market, valued at RMB 50-60 billion, at 20 percent.
Zhang noted that to achieve higher use of PU insulation in the building/construction sector the industry and its associations will need to make a concerted push — with particular attention needed to assurances on fire safety.
BMS “BULLISH ABOUT TDI”
Bayer MaterialScience did not delay or postpone its “state of the art” 250 kilotonnes-per annum gasphase plant for TDI (toluene diisocyanate) in Caojing, China, as a result of the crisis. “We kept it going because we said it is a strategic investment, and with the gas-phase technology, it also fits well with the energy-saving strategy we have,” said Peter Vanacker, head of Bayer’s global polyurethanes business.
BMS is “very convinced, very bullish about TDI and the investments,” he said. Gas-phase technology, which uses 80 percent less solvent and cuts energy costs by 60 percent, “will change the TDI world,” Vanacker said. “And we know it works because we have had the 30 ktpa pilot plant at Dormagen running for three years now,” he said: that plant’s product is “completely accepted in the marketplace.” In Germany, the identical gas-phase plant being planned for Dormagen will consolidate and expand capacity from Brunsbüttel and Dormagen, Vanacker said. He noted that the new TDI process is also safer, as phosgene hold-up is lower, and that it allows more compact plants, aiding sustainability.
In MDI (methylene diphenyl diisocyanate), BMS continues to look for ways to support demand growth in the market, Vanacker said and is still planning to consolidate MDI production in Europe into one 400-ktpa site at Brunsbüttel, Germany.
The group continues to “look very closely at the demand growth we see in China and to support that growth in China and Asia Pacific.” In terms of the systems business, Vanacker said Bayer MaterialScience is committed to being broad based. “That means we need to continue to further develop new applications for PU, to bring the latest technology for PU across the globe from wherever we have developed it, as fast as we can. So we will continue to develop the systems business as fast as we can.” And specifically, he said, “If you look at China, there is a huge demand also in systems. We have a systems unit in South China that is running very nicely, but we will set up a couple more systems houses in China in the relatively mid-term,” he said.
Vanacker also said that Bayer’s new Russia systems business is now operational.
New systems house for BASF?
Discussing BASF’s plan to set up a systems house in Chongqing in western China, Melanie Maas-Brunner, senior vice president for BASF’s polyurethanes business in Asia Pacific, pointed out that BASF has two other systems houses in China, in Shanghai and Nansha (close to Hong Kong).
In Asia, BASF thinks it will see high polyurethanes growth, in both China and India, “based on historic growth and also what we see as more dynamic growth than any other part of the world,” said Maas-Brunner (pictured).
So BASF’s planned MDI plant in Chongqing, as well as the systems house, is intended to both build up and serve the regional market there.
“But you can imagine that we also have some other ideas on what to do here in China,” she said, noting that, “we still need to build up the market.” The company has 38 systems houses globally. “I think we are in more or less most of the countries in Europe, said the BASF executive, indicating that there is a good chance of BASF building another systems house in China.
This could perhaps be in the north around “the Beijing area, where there is already a big construction market, and appliance industry and more, she said.
INVESTMENTS IN ASIA FOR DOW
Dow Chemical Co.’s polyurethanes business is making investments in Asia, notably at Map Ta Phut in Thailand, where it is building the largest Dow propylene oxide (PO) plant, a 390-kilotonnes-perannum facility, using hydrogen peroxide to PO (HPPO) technology, said Guillermo Novo, business vice president Polyurethanes. Dow has just “won a presidential green chemistry award in the US” for this technology, “developed by us and BASF,” said Novo, describing it as “a very core technology, which in Asia I think will be very critical because ... it’s only PO production,” [as opposed to the SMPO route, which also produces styrene monomer].
“That should come on stream towards the end of 2010, and that really will be a defining investment for the next decade in Asia because for the polyols business that is the core raw material for us.” Investments like this are significant, said Novo, noting that, “a plant like this is a billion dollars of investment.” Dow also aims to add downstream polyol capabilities as needed across the region.
Novo added that Dow is, also “making investments at our existing plants [for polyols], in Thailand, in Ningbo, in China,” and at other polyol plants in Australia and Taiwan. “As we finish off the PO plant, we are looking at new investments to bring on new capacity,” both for flexible and rigid foam, the Dow polyurethanes boss said.
Dow set up its first HPPO plant in Antwerp, Belgium, with BASF, and Novo said it is “very happy” with the plant in Europe and, “We are really betting heavily that this is going to be the technology for the future.” Novo also pointed to two “mega-projects” Dow is working on, in joint ventures: one in Saudi Arabia, at Al Jubail (moved from Ras Tanura), the other, Dow Shenhua, in Yulin city, in China’s Shaanxi Province, which is a coal-to-chemicals operation with crude oil refining also.
Kenny Ogawa, commercial director for Dow Polyurethanes, Asia Pacific, indicated that both these integrated projects will have “a full range of PU materials,” without being able to specify whether this includes isocyanates, PO or polyols. Novo said such details will depend on what upstream activities are finally approved.
Dow will also be looking at other investments in polyurethanes, “especially in the polyols side of the business, and working with our systems houses also,” Novo said.
Discussing plans for the systems business in the region, Ogawa said, “Dow has one systems house in Guangzhou, one in Thailand, at Map Ta Phut, then there are some other smaller units in other countries. “I would say we are working on bringing more capacity in the new sites across Asia-Pacific in future.” Ogawa is keen that, to meet the needs of the growing Asian market, Dow not only adds capacity, facilities and people, but also “develops more kind of local applications and technology,” and does not just copy from the US and Europe. Local needs are very different, he commented “A systems house is normally close to the market, so we have to understand where we want to go, where our target customers are located and where we have right the size and capability of systems house ... [so that] everything is tailor made,” he said.
“But definitely we need to expand.” Asked if Dow’s global PU plants were all running at full capacity again, Novo said, “We have a few plants right now that are going through turnarounds, but overall they are all running well. ... “Fortunately for us most of those were planned turnarounds and no major problems.”
Aggressive moves on pricing
Discussing prices for polyurethane products, Guillermo Novo, Dow’s business vice president for polyurethanes stressed, “This is right now the biggest challenge for the industry as a whole.” Novo said the prices Dow pays for its raw materials, “have been increasing significantly, especially if you look at propylene, that has been a big driver, but equally benzene has been an issue.” Dow is “moving everywhere aggressively on prices,” he commented.
Asked if the push has been successful, Novo said: “It’s always a process. But I can tell you we have been very firm on increases.” “If you just track what the raw material trend has been, it has been significant and the industry needs to recover that, and so do we. So pricing has been a major focus area and it still is,” Novo said.
For Bayer MaterialScience, Peter Vanacker, head of the global polyurethanes said, “The problem today is that through the crisis in 2008/2009 ... we were not talking about sustainable prices.” From 2005-2008 prices were stable and at an “acceptable level that allowed companies to reinvest,” he said.
Global price increases from BMS “are an attempt to restore prices to a level that we saw before 2009,” he said Jiansheng Ding, chairman of Yantai Wanhua Polyurethanes Co. Ltd agreed that profitability in polyurethane raw materials is low — and with economic recovery starting, he feels profitability should also rise.
“Appropriate profitability and a sustainable balance would be healthy for the whole downstream industry, to meet the low-carbon future,” Ding commented.
• Europe’s flexible foamers are saying that the current high frequency of raw material price changes hurts their businesses, and want to talk to the suppliers to see if there is any way of stabilising the system.
FAST GROWTH FOR CANNON
Discussing high growth for Cannon in the refrigerator sector, Wong Lee Meng, general manager for Cannon Far East Pte Ltd, said sales of its equipment to the big five domestic refrigerator producers in China are growing fast, noting that Cannon also has a business making parts for compressors, which is a good tie-in.
“I have never seen such growth before,” for fridge-making equipment, he said. Cannon’s “sales will double this year over last year,” when sales dipped — though not by the 20-30 percent expected originally, he added.
Companies such as Haier, reported to be the biggest fridge maker in China, continue to buy Cannon equipment because of the reliability of the whole system — the equipment itself and also the support and back-up in terms of software, parts, mechanical repairs and so on, Wong thinks.
For Cannon, Wong said, a winning point is that it has a dedicated local organisation, able to make rapid decisions, with strong technical service and parts supply.
And in a trend echoed across PU China 2010, Cannon’s stand was staffed largely by local people.
In automotive, Cannon has sold seating plants or steering wheel plants to Japanese or Taiwanese companies supplying local operations and also to European transplants operating in China, said Wong.
It has also sold equipment for instrument-panel moulding to Faurecia in Wuhan, and to local auto major SAIC (Shanghai Auto Industry Corp.).
In this sector, which needs complete multicomponent systems with dispensing/mixing/ metering, moulds, carousels and sophisticated mould carriers, local companies cannot compete, only the major non-domestic equipment suppliers can offer the right level of competence, Wong feels.
Cannon machinery is popular in Asia, “far more than competitive models,” giving it a market share greater than 50 percent, he claimed.
In China — all other aspects being equal — price is the driver, he agreed, so suppliers must control costs. But all critical components, pumps and mix heads, are still made in Italy. In these parts, “it doesn’t pay to localise,” Wong said.
Wong said Cannon has very energy-efficient technology for home appliance production, but will soon launch novel technology in this area.
The problem at the moment is that “when you make refrigerators rapidly, the lambda value (insulation efficiency) of the appliance can be sacrificed,” Wong said. Cannon, he claimed, has developed an approach that allows rapid processing and good insulation values, he said.
One approach is to use HFC-245a to supplement hydrocarbon blowing agents which have lower lambda values, but this pushes the cost up. Cannon thinks its new, winning formula will balance cost, production speed and lambda values, Wong said.
SOFTWARE FOR PU FOAMING
AnyFoam simulation software for simulating the polyurethane foaming process is “the first such software available commercially anywhere in the world,” according to Young-Wook Chae, assistant manager with Anycasting Co. Ltd of Korea.
AnyCasting has sold one licence for its foam software to a major Korean home-appliance manufacturer, Chae said, in a 27 May interview at the PU China 2010 event in Shenzhen.
“We can use it to predict foam patterns, air pockets and density distributions in the product,” Chae continued, noting that the programme allows foam conditions to be varied – for example, nozzle position, flow rate of the material and its temperature.
These parameters are fed into the virtual foaming software for users to be able to predict settings in their plants, the AnyCasting expert said, adding that the group has car companies interested in using the software to fine tune their seat-foam moulding processes.
Other companies have attempted to develop similar software in the past, notably in Japan, Chae said, where a ten-year programme failed to come up with a solution: “Foaming is very difficult to simulate,” he commented. Simulation has to replicate a process that is both a chemical and a physical reaction, he pointed out, with other factors to be considered such as conditions inside the mould.
AnyCasting has a foam material database to provide input factors, and considers the polyol and isocyanate mixing ratio, as well as specifying cream time, gel reaction ratio, hydroxyl values, and more.
Use of the software helps companies optimise their processes in a cost-effective way, the AnyCasting team told UTl, with far shorter lead times, and much waste reduction: useful processing parameters can be fed in from the start, and errors and scrap are minimised.
The PU industry is ripe for such software is it confronts ever-rising costs, and a highly competitive market. The software can be especially valuable in the R&D stage, AnyCasting said, to cut development time as well as keep production costs under control.
Chae put the cost of the AnyFoam programme at about $100 000, but said return on investment is good, with a payback period of one or two years.
Target processes for AnyFoam include appliances, automotive and train seat pads, and building and container insulation.
PU China sees 8400 visitors
The polyurethanes world turned out in large numbers for PU China 2010, in hot and steamy Shenzhen, 26-28 May, with 8400 visitors at the Shenzhen convention centre, said organisers Crain Communications Ltd of London, and China Minmetals Corp. of Beijing.
As well as nearly 6000 Chinese visitors, the show saw 1700 visitors from 53 other countries.
The PU China 2010 exhibition was the biggest such event ever held, and the organisers are now looking forward to the next China event: UTECH Asia/PU China 2011, in Shanghai, 6-8 Sept 2011.
Exhibitors UTI spoke to were pleased with the quality and number of the attendees, with plenty of purchasing power represented among the visitors crowding the aisles.
Matthew Hellstern, general manager for urethane performance specialities with Chemtura Corp., said he felt the event was an “excellent, professional show.” Chemtura’s presence was part of its strategy to expand local sales of its prepolymers, used for durable, tough uses in arduous conditions in the mining and oil and gas sectors, for example.
Sandwich panel machinery supplier Industrie Pu.Ma. Srl was also pleased with the level and number of visitors at the show. Managing director Nicola Schivo noted that Pu.Ma. has 80 percent of the sandwich panel business in China.
Apologies to those UTI interviewed at the event whose comments are not included in this issue’s feature. We plan to run a follow up feature in the Aug/Sept issue covering further aspects, including panel production and insulation.
STEPAN MUST MOVE PLANT
Business is going well for aromatic polyester polyol producer Stepan in China, with Q1 of 2010 a record for its JV, Nanjing Stepan Jinling Chemical Co. Ltd, said Kevin Knutsen, director of Stepan Asia Polymers and general manager of Nanjing Stepan Jinling Chemical Co. Ltd.
Stepan saw APP sales grow about 25 percent last year and it is expecting 30-50 percent growth this year, he added. The company set up the APP plant in Nanjing in 2005 and has grown it from small beginnings. And as the Chinese market “gradually becomes more sophisticated, we will grow,” Knutsen said.
The Stepan manager pointed out that, “There is a mentality in developing markets that polyols are like fillers, low cost and do not add value, and that has to change to get APPs more widely used, he indicated.
Stepan is happy to see APP’s overall market share growing as their value as high-quality, high technical performance materials used to improve the insulating qualities and flammability, become more widely recognised. And as legislation enforcing energy saving gets tighter, and China’s low-carbon-economy policy starts to take effect, this will intensify, Knutsen feels.
At present, Knutsen said, systems houses are a big part of Stepan’s customer base in China, with OEMs in the panel business a smaller part.
Stepan’s APP production last year (2009) was about 10 kilotonnes, and that will rise to 13-15 kt this year, with capacity dependent on the exact product mix, Knutsen said.
Stepan’s Nanjing facility is licensed to make 20 ktpa, he said, pointing out that the company has now received official notice that the site is part of an area that is being rezoned, so that the local government will require it to move within two years.
Nanjing’s authorities are going to dedicate more room for green spaces and residential housing, and move industry out, ahead of the World Youth Olympics, being held there in 2014, he said.
Stepan intends to take this opportunity to expand and grow the business, by adding some flexibility, Knutsen said. Looking on the positive side, he observed that it is “not often you such a chance to rethink a plant design after only five years.
Appliance sector booming
The refrigeration sector has also seen “unprecedented growth” after a slump during 2008, when the export market disappeared and the domestic market slowed, Wong said.
China’s stimulus measures worked here as well to allow families in rural areas to buy appliances, including washing machines and fridges. Approved local brands were subsidised, which “significantly boosted purchases of home appliances,” said Wong.
Since “China has 800 million farmers who have never had a refrigerator, that gave a very strong push to the market,” the Cannon executive said.
China’s Szechuan region has many new small fridge makers, which were hard hit in the crisis, as cash flow dried up. But now China is seeing a shortage of manufacturing capacity, in the Pearl River Delta, and around Shanghai — strong traditional sites for industry – but also in remoter regions in the west of China such as Chongqing, where a lot of workers are being recruited currently, Wong said.
Another important factor is that the higher end appliance sector is growing well because of the increasing affluence of a segment of the Chinese population, Wong said.
That has been accompanied by some increase in exports of local brands such as Haier and Haisen, he noted, adding that companies such as LG and Siemens who set up production in China “were always focussed on the export rather than the domestic market.
