As 2013 draws to a close, Urethanes Technology International magazine asked key players in the world of polyurethanes to share their thoughts on the industry during 2013 and tell us what they think we can expect in the coming year.
By Jane Denny
Steve Hulme, global business manager of polyurethane chemicals at Air Products & Chemicals, estimated a 3.5% growth in the global polyurethane industry for 2013.
Driven by Asia’s 6% growth, he noted that figure was below the region’s historical growth due to a cooling in China’s growth.
“Asia’s construction markets faired the best due to a surge in PU/PIR panel production in China to meet more stringent flammability standards. Automotive growth in Asia was around 4%.”
Appliances only grew at around 2% in Asia, he said, and flexible slabstock production was hit by a drop in China’s exports to the west and the country’s real estate dynamics, which resulted in a 3% growth rate.
“Similarly, shoe sole growth in Asia was just 6% with producers blaming the lack of credit available to Chinese SMEs and a weaker export market.
“EMEA growth was just over 1% but growth in the east continued at higher rates. EU construction markets were flat but PU grew at 2-3% as PU/PIR continued to gain share due to stringent insulation standards.
“Lower domestic demand yielded a weak automotive market with a decline of 5% compared to 2012. Appliance, flexible slabstock and shoe markets all grew in the range of 0-2% in line with GDP,” he said.
He said growth in the Americas was solid at 5%, driven by continued growth in North American spray foam insulation and the continued recovery of the automotive business, which could yield a 7% growth. Flexible slabstock markets grew at the typical 1-2% for the combined Americas and appliance manufacturers saw some benefits from onshoring that boosted growth to 6%.”
For 2014, “mild optimism is the general sentiment.” He said it is expected that global PU growth will be in the 4-4.5% growth range with Asia again leading growth at 6-6.5% – boosted by a predicted 8% growth in automotive markets.
EMEA markets are also expected to do better than 2013 with 2% growth driven by construction market improvements and with automotive markets stabilising after declines this year. Growth in the Americas is expected to be similar to 2013 at around 4-5% despite a slowing of automotive to 4% following accelerated recovery in 2013.
An expected acceleration of housing and industrial building will likely boost the insulating foams market. “It certainly feels like we are heading into a new year with some real momentum,” he added.
Michel De Smedt, Recticel’s external communications and investor relations manager, referred to the “volatility” of the market during 2013, adding that consumers were delaying their purchases, especially in bedding but also, he said, within what he described as an “uncertain” automotive market.
He said: “Investment in industry is relatively weak and we are feeling that in the flexible foams business. The feeling is perhaps that the situation will not further deteriorate as we encountered over the previous year but will still be very challenging.”
Kaj-Olav Granas, chief executive of foam machinery supplier Hyma, said the polyurethanes market was “looking brighter” for 2014.
“It has been slow but it is speeding up at the moment and we expect the first half of next year to be even busier than now.
“Financially, Europe is coming back and we are seeing a lot of activity in East Africa. Inquiries are up and more serious in that we are talking about delivery times rather than prices now and as a company we are employing more people.
“It seems like at last it might be over and things are getting better,” he added.
Massimo Monchiero, general manager at Italian machinery firm Tecmac, also said 2013 had been an improvement on the previous year although he added that certain market forces had made it difficult for companies like his.
He said: “2012 was a very hard time so hopefully next year will consolidate [on] 2013 or be even better. When it is hard for chemical suppliers to supply chemicals to existing customers it is even harder for us to find companies that can invest in new lines.
“The market was very much shrunken and there are new suppliers of machinery coming from the Far East and more companies are becoming more and more price-orientated which makes it harder to sell and harder to let potential customers know the difference in quality and servicing between us and competitors. People looking on the internet think all companies there are equal,” he added.
Francesco Abba, sales and marketing manager at Cannon Afros, said he expected the polyurethane market to continue at a growth rate of 5% to 6% per year – as opposed to the 6% or 7% experienced over past 20 years.
He said: “What we have seen in 2013 compared to 2012 is a positive growth in incoming requests and orders but the end of the year has been lower for us than the beginning of it.
“We have seen that the number of machines we are selling has reduced compared to previous years but that the configurations of the machinery that is selling is more complicated than in the past.” He said legislation changes regarding insulation and the focus on energy saving had had a positive impact on the company’s insulation sector and that government subsidies for refrigeration in China had boosted sales in the Far East – where the market is growing consistently, he added.
The panel industry – both discontinuous and continuous – had also seen a reasonably good year, he said but added that both had been a little under the expected growth rate.
On the automotive side, he said Cannon was still suffering due to the global financial crisis – particularly that affecting the small and medium-sized car market but that because this was a growth area in China and that the company was consistently investing in that market.
“With the worldwide GDP reduction forecast, I expect there will be less money around for new goods and cars. It’s also true that emerging countries – such as the BRIC nations – are not growing according to the expectation. Provided this is true, we expect 2014 to be more or less like 2012 – a little lower than this year.”
Alexander Agafonov, head of marketing at Russia’s FoamLine, said the market there was set to grow at a rate of about 3% or 4% – which translates to 110 kT/year.
He said the Russian market for flexible foam used in furniture and mattresses still suffered from its traditional reputation for poor quality in the country. “This puts consumers off the material,” he said.
Axel Wynands, general manager sales at Fecken-Kirfel in Germany, said the “stability” that had established itself within the polyurethane market was proving favourable for the company.
He said: “It was very difficult to make forecasts but the last two years have been good for us, particularly the last year. We reached the point where we know exactly what we will produce for the next three months and from a sales point of view we are very happy.”
The company’s production of cutting machines for flexible foam applications – about 75% of the firm’s production capacity – retained the potential to bouy up the business. “If the South American market for machines for flexible foam goes down, Asia might be going up and if the automotive market drops, furniture applications might be going up. This is the advantage of our business.”
The company has recently developed some new cutting machinery. The Looper H32LF which was introduced four years ago, is already being sold worldwide and contributes to an efficient and economic processing of PU foams in large series. At this year´s K show, Fecken-Kirfel unveiled the trimming machine T 6, which found huge favour with the industry. The T 6 contributes to a “much more accurate and faster” cutting process, Wynands added.
Jorg Palmersheim, secretary general of ISOPA, the European Isocyanate producers’ trade association, described the ECHA decision not to put TDI forward for listing candidature as a “positive result” for the industry – and the most important regulatory issue of the year. He said, however, that the industry must keep a close eye on product stewardship, particularly with regards to safety procedures and regulations for its workers.
The focus on respiratory sensitisors within the European agenda - embodied in the SVHC (substances of very high concern) Roadmap – is something producers and industry players must keep at the forefront of their minds, he said. Similarly, waste management – particularly trader-to-trader was an area that was likely to attract fresh directives.
Going forward, he said the association was keen to develop its knowledge around the energy efficiency of its Passivehaus – a polyurethane-rich house, which was due to be unveiled at a ceremony in December 2013.
“We are looking forward to investigating the data that this project yields and assessing the contribution polyurethane can make to energy efficiency,” Palmersheim said.
Economically, he said he was looking for a boost to recovery in the southern European countries but also keen to be part of the new networking opportunities that Euope’s new parliament and commission would present.
Alexey Kuznetsov, managing director at OSV Technology, said: “Traditionally, the most important markets for us were in Russian-speaking countries. However, every year OSV equipment sales in Western Europe, Middle East, Southeast Asia and other regions are steadily growing.”
The growth, he said, is mainly due to OSV’s aggressive advertising policy and participation in specialized international exhibitions since 2010, including Shanghai, Delhi, Istanbul, Maastricht and finally in K2013 in Dusseldorf.
“As in previous years, the most popular models of equipment are machines used for the production of furniture and architectural decor. However, every day we get more and more orders for equipment to be manufactured to individual technical specifications. In particular, these are casting machines for hot casting elastomers, based on TDI and MDI, as well as machines for polyurethane adhesives and machines for pultrusion lines operation.
“In the next two or three years we expect Russian-speaking countries’ markets to grow in the sphere of equipment for engineering and technical purposes, as well equipment for special applications, but interest in equipment for architectural and furniture applications will probably decline,” he added.
Glenn Wright, business president, polyurethanes, systems and PO/PG at Dow, said the year’s automotive industry rebound helped the polyurethanes business due to its importance in a variety of car and truck applications. He said he had also seen evidence of more and more technologies migrating towards polyurethanes as a solution.
Wright said: “We expect the automotive industry to continue strengthening into 2014, with the trend toward light-weighting vehicles as part of an energy efficiency strategy presenting more opportunities for polyurethanes technologies to replace incumbent materials.” He said he had noted a similar upward trend for polyurethane composites, which was being driven by energy efficiency in industrial, construction and infrastructure applications. The year had also seen, he said, the continued growing popularity of foam mattresses over traditional spring mattresses in North America and Europe.
“The positives for the year were that we continued to see polyurethanes as a key enabling technology that grows at a rate greater than GDP and is used in a wide variety of end-markets from consumer comfort, energy efficiency and industrial end-use applications,” Wright said.
He said energy efficiency would continue to drive opportunities for rigid polyurethane foams across many markets next year as the rebound in construction markets gains traction. He said the industry could also expect continued growth in the coatings and adhesives arenas.
Wright added: “On the flip side, we saw challenging economic conditions in some of our key markets such as Southern Europe, China, and Brazil, which led to weaker-than-expected demand for the year. That said, we see the demand picking up briskly in the fourth quarter and expect 2014 to be a much stronger year.”
Frank Grunert, Bayer MaterialScience´s regional head of polyurethanes in the EMEA and LATAM regions, said the 5% annual growth rate in the global polyurethanes market was something the company expected to continue for the medium and long term future.
“The global factors strongly contributing to this growth include increasing urbanization and mobility, worldwide measures for saving energy and the economic growth driven by rising living standards, mainly in threshold countries.
“It also corresponds to Bayer MaterialScience´s expectations that the PU market is undergoing structural changes, a trend that has continued in 2013. This is not the least due to new world scale economics in production capacities, players preparing to enter the market and to changes in regional demand,” Grunert said.
“In our view, growth of the PU market will in future be driven by these trends. Another growth factor is the substitution of other material classes driven by unique properties and a superior performance of polyurethanes, for example in building insulation. There is no doubt that profitability and return on capital will remain a key challenge for the PU industry. Future success and competitiveness in the PU business will continue to be predominantly based on innovations leading to new business options and cost-efficient technologies providing a competitive advantage.
“This is supported, for example, by a new technical lab for polyurethanes in Leverkusen, which was inaugurated recently. With the help of this lab, we believe we are one step ahead of the competition,” he said.
Harald Kullmann, sales director at Albrecht Baumer, said 2013 had brought the company its highest ever turnover.
“In 2013, we realised that the niche market of the foam industry had been in opposition to some global economic trends. We made good business with countries and regions that have been weaker in most industries, such as Portugal, South America or North and Central Africa. This was related to our increased sales activities in those areas. Our sales have been as strong as expected in German-speaking countries, Eastern Europe and Asia.
“The enormous growth in plant business is definitely a result of the fact that more and more foam producers are reorganising their production from a short block to a much more effective long block production.
“In the EU and Eastern Europe, we noticed that the upholstery industry had been declining in 2013. This decrease could be compensated by constantly growing volumes in the market of foam mattresses and the foam cutting units needed for this.
“In general, we also notice a higher demand for fully automated contour cutting machines with loading and unloading equipment which have been our core competence ever since.
“Furthermore, Baumer owes this record breaking sales to the great growth in splitting machines for materials including rubber, rubber rebond, PE, elastomer etc. This is why our R&D focus in 2013 was on heavy splitting and automation and why it will continue to be our focus in 2014.”
Nicolas Beyl, president of the reaction process machinery segment at KraussMaffei, said the market started off slow in 2013 by comparison with 2012 – “a very strong” year.
“In early summer 2013, however, it became really strong and overall we saw a clear growth compared with 2012.”
According to Beyl, the company’s automotive (both molded flex and interior trim) segment had a good year in 2013 across the globe, while appliances rebounded following weak demand in 2011 and 2012.
“Like everyone in the business, we experience composites as booming, particularly in automotive applications. But unlike others, we lead by combining them with perfect, some say class A grade surfaces as shown in the roof segment of the Roding Roadster R1 at the K show.”
Beyl singled Germany out as a growth region for this segment but also pointed to first projects in Japan and the US.
In summary, he said his company expected continuous growth in NAFTA/US during 2014. “Europe will be relatively stable, Northern Europe good while Southern Europe still suffers due to the Euro crisis.
Invista president Bob Francois said: “Polyurethanes are a very broad and growing market. The technology behind polyurethanes is evolving, which provides great opportunities for continual innovation.
“With the technical knowledge and expertise we’re building at Invista, we are focused on innovation and responding to changing customer needs. Our outlook on the polyurethane market is positive as we have a number of businesses that are actively participating in the industry by introducing new products and pursuing growth.”