In the first of a new series of views from the top, Lee Salamone looks at the state of the North American PU market
Polyurethane NAFTA markets showed recovery in 2012
Since 1999, the American Chemistry Council (ACC) Center for the Polyurethanes Industry (CPI) has published information on the polyurethanes industry in North America in its End Use Market Survey on the Polyurethanes Industry in the United States, Canada and Mexico. The latest survey, comprising over 300 pages, 150 tables as well as charts and diagrams based on more than 250 interviews with various participants in the polyurethanes industry, provides a detailed analysis of the major end-use markets for polyurethane in North America in 2012.
The United States economy has been showing signs of recovery in the last two years and demand for consumer goods has increased now that the worst of the downturn is over.
Polyurethanes product production increased by about 556Mlbs (252kT) from 2010 to the end of 2012. Production rose in all major product segments with the notable exception of Reaction Injection Molding/Reinforced RIM (RIM/RRIM), which witnessed a sharp decline of -25.0%. Polyurethane in RIM applications has been commonly replaced by other materials, like steel and thermoplastic polyolefin.
The fastest growth rates were in polyurethane binders, flexible molded foam and flexible slabstock. The flexible foam segment grew significantly thanks to increasing production of cars and commercial vehicles. Vehicle production grew by 11.6% in 2011 and by 19.3% in 2012.
The United States bedding market is also buoyant, with mattresses perceived as high value items and imports remaining relatively low. Technological advancements, such as the incorporation of gel foam into mattresses, are also helping boost the industry.
A rebound in the private construction sector, particularly housing starts in the US, has increased demand for many polyurethane-based construction-related products such as coatings, adhesives, sealants and rigid foam insulation. Remodeling expenditures have also increased.
The Canadian economy has remained fairly strong throughout the global financial downturn, however, the growth rate declined in 2012. Modest growth of credit and disposable income decreased the private consumption growth, there was a slowdown in the housing sector and, in addition, the uncertainty of the external environment resulted in weakened demand for exports.
Overall production of polyurethane products increased between 2010 and 2012. Some market sectors, such as binders, performed particularly well largely driven by the recovery of the United States construction sector.
Spray polyurethane foam has traditionally been a strong product in Canada, and many producers also operate in the US. The main reasons appear to be that Canadians are more concerned about proper insulation and the effort to upgrade insulation has been ongoing for years.
The Canadian automotive sector performed well and the demand for polyurethane products used in automotive applications experienced growth. The foam mattress market is also gaining acceptance and has grown in recent years.
The production of polyurethane products in Canada increased by about 35Mlbs (16kT) from 2010 to the end of 2012.
Mexico has not followed the pattern of economic slowdown of its northern neighbors over the past few years and seemed relatively unaffected by the turmoil in Europe.
Mexico has a huge potential for accelerating economic growth. The country maintained a 3.9% growth during 2012, due to external and internal demand, with a firm expansion in services. However, the presidential election generated some uncertainty in the marketplace in 2012, adversely affecting the demand for some polyurethane products.
Mexico enjoys a key strategic advantage over other developing economies thanks to its proximity to the US, and as such remains a manufacturing hub for many industries, including automotive and appliances. Mexican vehicle production surpassed three million units in 2012, after falling to just 1.5 million units in 2009, with the US as its largest export market.
A narrowing gap in labour costs between Mexico and China, improving productivity in Mexico and rising international shipping costs are all enabling Mexico to regain some of the advantage it had previously lost in the US market.
Total production of polyurethane products increased in Mexico by more than 65Mlbs (29kT) from 2010 to 2012, with the biggest gains in flexible molded foam, sealants, flexible slabstock and adhesives.
The survey concludes that 2012 was a positive year for the NAFTA polyurethane industry – all three countries experienced growth. Demand for fuel and energy efficiency as well as environmental and health issues continue to drive the market. The growth of the insulation sector is expected to continue.
To purchase a copy of the survey, visit www.polyurethane.org.