The polyurethane machinery industry is highly entrepreneurial and is made up of large and small firms. How did they find 2017?
From large to small, advanced to simple â the polyurethane machinery sector is a complicated place. In 2017, companies were less optimistic than in 2016, as sentiment levels returned towards the long-term average.
In terms of materials, 2017 was characterised by shortages, tightness, and high prices. Several senior members of the industry were worried that it could lead to other materials taking the place of polyurethane.
Machinery capital purchases are made by companies with a view to the next two or three years. Looking at the data from the machinery survey, it is too soon to say if the high price of raw materials is having an impact but, according to figures from the UTIMcIndex, which is compiled from the responses to our survey, machinery makers are slightly more pessimistic in 2017 than they were in 2016.
The index has dropped from 4.8 to 4.2 over the course of a year and has returned to about the same level as it was between 2012 and 2015. During that time, it fluctuated between 4.5 and 3.8. See Chart 1.
This index is calculated by taking responses from the survey about whether companies are planning to build, buy, consolidate, divest or close one or more of their plants. For more details, see the box below.
This year is noteworthy because, according to the survey, there were approximately twice as many companies considering building new facilities than the long-term average. Approximately twice as many are looking to divest a polyurethane machinery manufacturing business as the long-term average.
All the other numbers that go to make up the basis of the UTI machinery index were very close to the five-year averages.
Although not included on the list of company plans in Table 2, Urethanes Technology International has had an expansion confirmed confidentially. This is expected to be formally announced at UTECH Europe, to be held in Maastricht 29-31 May.
Diving into product sectorsThe survey asks respondents to rate which of the five important business areas in which they believe machinery purchase is highest at present. We specifically study automotive parts, furniture and bedding, refrigerated appliances, building and construction, and general industry. In three of these areas â automotive parts, refrigerated appliances and general industry â in 2017 more respondents said that machinery purchases were high in those sectors than did in 2016. In all three cases, respondentsâ levels of optimism are rising, and are now closer to the mean between 2012 and 2016. However, in furniture and bedding, and also building and construction, respondents believed that, although sales were high, fewer felt as optimistic than they were in 2016. Furniture and bedding as a sector is very close to the consumer, and it is possible that the higher price of diisocyanates in 2017 may have depressed demand slightly. In the construction sector, Kingspan was especially vocal about passing on price rises to its customers in 2017, and has taken the hit in terms of volumes, according to its CEO, Gene Murtagh. His company believes that there has been âa structural shiftâ towards phenolic boards. Time will tell if that is sustained and significant enough to dint the growth of machinery for rigid polyurethane and PIR boards.
Regional differencesIn 2017, respondents said that sales were growing fastest of all in North America. There was a three-way tie for second between Central/Eastern Europe, Middle East/Africa and South East Asia. Western Europe and China tied for fifth behind them, while South America comfortably held off Australasia. Japan came last. Those are the headlines but, looking more deeply, it is clear that respondents have believed that sales are growing fastest in North America. This confidence has grown steadily since 2014, apart from a slight dip in 2015. The feeling that the US is the fastest growing market for polyurethane machinery has now almost reached its 2011 level That was the peak level of our data series. The contrast with South America is very marked. Although the perception is that sales in the region increased in 2017 compared with 2015 and 2016, it is still at about half the level it was in 2014. This, in turn, is about half the level it was in 2011. It is interesting to see where people feel that sales are growing, but the reality of actual sales in 2017 was quite different, according to the survey. Reported sales were lower in 2017 in all regions than in 2016. In fact, sales, according to the data in 2017, they were lower than the average between 2012 and 2016 in all regions. It is hard to see if this is related to a single year of high raw materials prices dampening demand. This will become more clear when the survey is repeated in 2019.
What are we going to do next?Thatâs the big picture, but what do individual companies expect to do over the next few weeks and months? It is clear that they will keep innovating and, excitingly, this year we have a new entrant into the polyurethane machinery sector, with Nitroil. The company is offering a range of machines that will be launched officially at UTECH Europe 29-31 May 2018 in Maastricht, the Netherlands. Several companies used the survey to notify us of new product offerings. OSV said it plans to start composites machinery manufacturing, with the brand-new OSV Combi Ultra machine. This is designed to process a mixture of liquid polymers and dry abrasive fillers for the composite sector. Alexey Kuznecov, a director at the company, added that OSV plans to build, equip and start up new production hall of 1000 m2. Â
|Table1 : Ranking polyurethane equipment suppliers by sales of new machinery|
|Company Name||PU Sales, $m 2017||Total Sales $m 2017||Total Staff||PU staff|
|NG= Not Given|
|Note: information in $ if supplied in other currencies converted on 5 March 2018|